Galla Corporation makes a product with the following standard costs: The company
ID: 2478665 • Letter: G
Question
Galla Corporation makes a product with the following standard costs:
The company budgeted for production of 2,400 units in June, but actual production was 2,500 units. The company used 19,850 pounds of direct material and 980 direct labor-hours to produce this output. The company purchased 21,700 pounds of the direct material at $6.70 per pound. The actual direct labor rate was $19.20 per hour and the actual variable overhead rate was $1.80 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 quantity variance for June is:
$4,550 U
$4,355 F
$4,550 F
$4,355 U
Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 8.2 pounds $7.00 per pound $57.40 Direct labor 0.4 hours $20.00 per hour $8.00 Variable overhead 0.4 hours $2.00 per hour $0.80Explanation / Answer
Material Variance Quantity Variance Standard Cost per unit (Actual usage per unit - Standard usage per unit) Std cost per unit $7.00 Actual usage per unit 19,850 Standard usage per unit (5400*7) 20,500 Material Quantity Variance 4,550.00 Favourable
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