The following data is given for the Stringer Company: Budgeted production Actual

Question

The following data is given for the Stringer Company: Budgeted production Actual production Materials: 913 units 1,027 units Standard price per ounce Standard ounces per completed unit Actual ounces purchased and used in production Actual price paid for materials $1.98 12 12,694 $26,023 Labor: Standard hourly labor rate Standard hours allowed per completed unit Actual labor hours worked Actual total labor costs $14.28 per hour 4.9 5,289.05 $80,658 Overhead: Actual and budgeted fixed overhead Standard variable overhead rate Actual variable overhead costs $1,004,000 $26.00 per standard labor hour $148,093 Overhead is applied on standard labor hours. Round your final answer to the nearest dollar. Do not round interim calculations. The direct materials price variance is a. $888.58 favorable b. $2,221.45 favorable c. $888.58 unfavorable d. $2,221.45 unfavorable

Explanation / Answer

SOLUTION

Direct Materials Price varaince = $888.58 (U)

Direct Materials Price varaince = Actual Quantity * (Actual price - Standard price)

= 12,694 * ($2.05 - $1.98)

= 12,694 * $0.07

= $888.58 (U)

Actual price = $26,023 / 12,694 = $2.05

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