Talladega Industries, Inc., (TII) developed the following standard costs for dir

Question

Talladega Industries, Inc., (TII) developed the following standard costs for direct material and direct labor for one of their major products, the 10-gallon plastic container.

Standard quantity

Standard price

Direct materials

0.10 pounds

$30 per pound

Direct labor

0.05 hours

$15 per hour

During August, TII produced and sold 10,000 containers using 980 pounds of direct materials at an average cost per pound of $32 and 500 direct labor hours at an average wage of $15.25 per hour.
August's direct material cost variance was:

Select one:

a. $1,960 unfavorable.

b. $600 favorable.

c. $1,360 unfavorable.

d. None of the above is correct.

Standard quantity

Standard price

Direct materials

0.10 pounds

$30 per pound

Direct labor

0.05 hours

$15 per hour

Explanation / Answer

SR 30 AR 32 SQ 1000 AQ 980 direct material cost variance= SC-AC ie= (30*1000)-(32*980) ie= 30000-31360 ie= 1360(A) option c is correct

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