Handerson Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 8.5 kilos $ 6.00 per kilo Direct labor 0.4 hours $ 20.00 per hour Variable overhead 0.4 hours $ 6.00 per hour The company reported the following results concerning this product in August. Actual output 3,200 units Raw materials used in production 29,030 kilos Purchases of raw materials 31,600 kilos Actual direct labor-hours 1,160 hours Actual cost of raw materials purchases $ 195,920 Actual direct labor cost $ 22,736 Actual variable overhead cost $ 7,540 The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for August is:

Question

Aarav Bernard

Business

23 October, 16:15

Handerson Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 8.5 kilos $ 6.00 per kilo Direct labor 0.4 hours $ 20.00 per hour Variable overhead 0.4 hours $ 6.00 per hour The company reported the following results concerning this product in August. Actual output 3,200 units Raw materials used in production 29,030 kilos Purchases of raw materials 31,600 kilos Actual direct labor-hours 1,160 hours Actual cost of raw materials purchases $ 195,920 Actual direct labor cost $ 22,736 Actual variable overhead cost $ 7,540 The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The materials quantity variance for August is:

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Answers (1)

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Johanna Humphrey · Answer 1

Direct material quantity variance = $10,980 unfavorable

Explanation:

Giving the following information:

Standard Price or Rate Direct materials 8.5 kilos $ 6.00 per kilo

The company reported the following results concerning this product in August. Actual output 3,200 units Raw materials used in production 29,030 kilos Purchases of raw materials 31,600 kilos. Actual cost of raw materials purchases $ 195,920

Direct material quantity variance = (standard quantity - actual quantity) * standard price

Standard quantity = 8.5*3,200 = 27,200 kg

Actual quantity = 29,030kg

Standard price = $6

Direct material quantity variance = (27,200 - 29,030) * 6 = $10,980 unfavorable