Frogue Corporation uses a standard cost system. The following information was pr

Question

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 cost variance is:
A. $3,400 unfavorable
B. $9,000 unfavorable
C. $9,000 favorable
D. $3,400 unfavorable

The answer is B but i need help on how to do the question

Explanation / Answer

To calculate material cost variances, the way to do is to use (Standard Quantity for actual output x Standard Price/kg) - (Actual quantity for actual output x Actual Price/kg)

Thus, Standard Quantity for actual output x Standard Price/kg = 5000 units x 6kg/unit x $2.80/kg = $84000

Actual quantity for actual output x Actual Price/kg = 31000 kg x $3/kg = $93000

The difference between the above 2 amounts is $9000. Actual costs is larger than standard cost, means we have spent more than the standard. Thus, the $9000 will be an unfavourable variance.

Hope this helps!

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