Epley Corporation makes a product with the following standard costs: In July the
ID: 2478674 • Letter: E
Question
Epley Corporation makes a product with the following standard costs:
In July the company produced 3,300 units using 12,240 pounds of the direct material and 2,760 direct labor-hours. During the month, the company purchased 13,000 pounds of the direct material at a cost of $35,100. The actual direct labor cost was $51,612 and the actual variable overhead cost was $20,148.
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 July is:
$2,070 F
$2,070 U
$1,863 F
$1,863 U
Standard Quantity or Hours Standard Price or Rate Direct materials 3.5 pounds $3.00 per pound Direct labor 0.8 hours $19.00 per hour Variable overhead 0.8 hours $8.00 per hourExplanation / Answer
Standard for 1 unit finished goods
Standard for 3300 unit finished goods
Actual for 3300 unit finished goods
Quantity
rate
Total
Quantity
rate
Total
Quantity
rate
Total
Direct material
3.5
3
10.5
11550
3
34650
12240
2.6
31824
Material quantity variance = (12240-11550)*3
=2070 U
Standard for 1 unit finished goods
Standard for 3300 unit finished goods
Actual for 3300 unit finished goods
Quantity
rate
Total
Quantity
rate
Total
Quantity
rate
Total
Direct material
3.5
3
10.5
11550
3
34650
12240
2.6
31824
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