Oxnard Industries produces a product that requires 2.6 pounds of materials per u

Question

Oxnard Industries produces a product that requires 2.6 pounds of materials per unit. The allowance for waste and spoilage per unit is .3 pounds and .1 pounds, respectively. The purchase price is $2 per pound, but a 2% discount is usually taken. Freight costs are $.10 per pound, and receiving and handling costs are $.07 per pound. The hourly wage rate is $12.00 per hour, but a raise which will average $.30 will go into effect soon. Payroll taxes are $1.20 per hour, and fringe benefits average $2.40 per hour. Standard production time is 1 hour per unit, and the allowance for rest periods and setup is .2 hours and .1 hours, respectively.

The standard direct labor rate per hour is

$12.30

$15.90

$15.60

$12.00

If 10,000 units are produced with an actual price per pound of $2.15 and actual quantity of 30,500 lbs. what is the Total Materials Variance?

$12.30

$15.90

$15.60

$12.00

If 10,000 units are produced with an actual price per pound of $2.15 and actual quantity of 30,500 lbs. what is the Total Materials Variance?

Explanation / Answer

Standard direct labour rate per hour = (12+0.30+1.20+2.40) = 15.90 per hour

so answer is b) 15.90

Total material variance = (10000*3*2.13)-(30500*2.15) = 1675 Unfavorable

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