Gilder Corporation makes a product with the following standard costs: Standard Q

Question

Gilder Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 5.3 grams $7.00 per gram $37.10 Direct labor 1.6 hours $18.00 per hour $28.80 Variable overhead 1.6 hours $7.00 per hour $11.20 The company reported the following results concerning this product in June. Originally budgeted output 5,700 units Actual output 5,600 units Raw materials used in production 28,470 grams Purchases of raw materials 32,700 grams Actual direct labor-hours 5,400 hours Actual cost of raw materials purchases $232,170 Actual direct labor cost $102,060 Actual variable overhead cost $36,180 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 June is: $3,270 U $2,868 F $2,868 U $3,270 F

Explanation / Answer

Material Price Variance = ( Standard Price- Actual Price)* Actual Qty (7-232170/32700)*32700 - (7-7.1)*32700 - .1*32700 Material Price Variance = 3270 Unfavourable The correct answer is A. $ 3270 U

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