Gentille Corporation makes a product with the following standard costs: The comp

Question

Gentille Corporation makes a product with the following standard costs: The company produced 6,000 units in May using 36,970 kilos of direct material and 4,340 direct labor- hours. During the month the company purchased 40,400 kilos of the direct material at $4.70 per kilo. The actual direct labor rate was $13.70 per hour and the actual variable overhead rate was $2.70 per hour. 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 price variance for May is: a. $11,880U b. $11,880F c. $12,120F d. $12,120U

Explanation / Answer

material price variance =AQ( AR -SR)

                                  = 40400(4.70 - 5)

                                   = 40400 * -.3

                                 = - 12120 (F)

Correct option is "C"

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