Landram Corporation makes a product with the following standard costs: Standard

Question

Landram Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials Direct labor Variable overhead 2.0 liters 1.3 hours 1.3 hours $7.00 per liters $17.00 per hour $5.00 per hour The company produced 4,500 units in April using 10,190 liters of direct material and 2,170 direct labor-hours During the month, the company purchased 10,760 liters of the direct material at $715. per liter. The actual direct labor rate was $17.70 per hour and the actual variable overhead rate was $4.90 per hour. 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 April is:

Explanation / Answer

Materials quantity variance = Standard rate*(Actual quantity-Standard quantity) =7*(10190-4500*2)= 8330 Unfavorable

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