Biery Corporation makes a product with the following standard costs: The company
ID: 2577244 • Letter: B
Question
Biery Corporation makes a product with the following standard costs:
The company produced 4,100 units in April using 5,380 liters of direct material and 2,610 direct labor-hours. During the month, the company purchased 6,000 liters of the direct material at $5.80 per liter. The actual direct labor rate was $19.80 per hour and the actual variable overhead rate was $2.90 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:
$300 U
$290 U
$290 F
$300 F
Standard Quantity or Hours Standard Price or Rate Direct materials 1.3 liters $6.00 per liter Direct labor 0.6 hours $19.00 per hour Variable overhead 0.6 hours $3.00 per hourExplanation / Answer
Option 1 - 300U Material quantity variance AQ (a) SQ (b) Variance (c=b-a) SP (d) Total variance (e=c*d) F/U Material quantity variance = (AQ-SQ)*SP AQ = Actual quantity consumed= 5380 SQ = Standard quantity = 4100 *1.3 = 5330 SP = Standard price per unit = $6 F= Favourable U = Unfavourable Material quantity variance AQ (a) SQ (b) Variance (c=b-a) SP (d) Total variance (e=c*d) F/U 5380 5330 -50 6 -300 U
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