Epley Corporation makes a product with the following standard costs: Direct mate

Question

Epley Corporation makes a product with the following standard costs: Direct materials Direct labor Variable overhead Standard Quantity or Hours 2.0 pounds 1.0 hours 10 hours Standard Price or Rate $700 per pound $14.00 per hour $6.00 per hour in July the company produced 4700 units using 10.280 pounds of the direct material and 2.260 direct labor- hours. During the month, the company purchased 10,850 pounds of the direct moterial at a cost of $76,730. The actuai direct labor cost was $38,238 and the actual vanable overhead cost was $11,939 The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases varlance is computed when the materials are purchased The materials quantity variance for July Is: O $640 U O $780 F o $6.60 O $640 F

Explanation / Answer

=(4700*2-10280)*7

=6160 U

Material QTY Variance =(Standard QTY – Actual QTY)*Standard Price

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