Question Frogue Corporation uses a standard cost system. The following informati

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Frogue Corporation uses a standard cost system. The following information was provided for the period that just ended:
actual price per kilogram $3.00
actual kilograms of material used 31,000
actual hourly labor rate $18.10
actual hours of operation 4,900 labor hours
standard price per kilogram $2.80
standard kilograms per completed unit 6 kilograms
standard hourly labor rate $18.00
standard time per completed unit 1 hour
actual total factory overhead $34,900
fixed factory overhead $18,000
standard fixed factory overhead rate $1.20 per labor hour
standard variable factory overhead rate $3.80 per labor hour
maximum plant capacity 15,000 hours
plant operated during the period 10,000 hours
units completed during the period 5,000
The direct materials price variance is:
A. $6,200 favorable
B. $2,800 favorable
C. $2,800 unfavorable
D. $6,200 unfavorable

Explanation / Answer

Contribution margin is:
a. the excess of sales revenue over variablecost

c. $2,800 unfavorable
The direct materials quantity variance is = (Actualquantity used × Standard price) - (Standard quantityallowed × Standard Price)
Standard kilograms per completed unit 6 kilograms & Unitscompleted during the period =5,000
So direct materials quantity variance = (31000 kg * $2.80) -((5000 unit*6kg/unit) * $2.80)
direct materials quantity variance = 86,800 - 84000 = 2800Unfavorable

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