Casteel, Inc., manufactures a single product in which variable manufacturing ove

Question

Casteel, Inc., manufactures a single product in which variable manufacturing overhead is assigned on the basis of standard direct labor-hours. The company uses a standard cost system and has established the following standards for one unit of product Direct materials Direct labor Variable manufacturing overhead During March, the following activity was recorded by the company: The company produced 2,100 units during the month Standard Quantity Standard Price or Rate Standard Cost $4.50 $3.60 0.75 1.5 pounds 0.6 hours 0.6 hours S3.00 per pound S6.00 per hour S1.25 per hour .A total of 5,700 pounds of material were purchased at a cost of $23,000 . There was no beginning inventory of materials on hand to start the month; at the end of the month, 2,100 pounds of material remained in the warehouse During March, 1,600 direct labor-hours were worked at a rate of S6.50 per hour . Variable manufacturing overhead costs during March totaled S1,800 The direct materials purchases varience is computed when the materials are purchased The materials quantity variance for March is Select one O a. $1,350.00 O b. $13,950.00 O c. $2,700.00 O d. $27,900.00

Explanation / Answer

Material quantity variance = (Standard quantity-actual quantity)Standard price per pound

= (2100*1.5-3600)*3

Material quantity variance = 1350 U

so answer is a) $1,350.00

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