Rax Company has developed the following standards for one of its products: Direc

materials price variances=(14-13.60)*10000 = $4000 favorable Material usage variance = (9600-9000)*14 = $8400 favorable

ID: 2371965 • Letter: R

Question

Rax Company has developed the following standards for one of its products:

Direct materials

12 pounds x £14 per pound

Direct labour

3 hours x £18 per hour

Variable overhead

3 hours x £8 per hour

The following activities occurred during the month of October:

Materials purchased

10,000 pounds at £13.60 per pound

Materials used

9,000 pounds

Units produced

800 units

Direct labour

2,500 hours at £19.00 per hour

Actual variable overhead

£22,000

The company records materials price variances at the time of purchase.

Raxâ€™s materials usage variance would be

£8,400 unfavourable.

£8,400 favourable.

£5,600 unfavourable.

£5,600 favourable.

Direct materials

12 pounds x £14 per pound

Direct labour

3 hours x £18 per hour

Variable overhead

3 hours x £8 per hour

materials price variances=(14-13.60)*10000 = $4000 favorable

Material usage variance = (9600-9000)*14 = $8400 favorable

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