Gilder Corporation makes a product with the following standard costs: The compan

Question

Gilder Corporation makes a product with the following standard costs:

The company reported the following results concerning this product in June:

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 price variance for June is:

Noreen 4e Rechecks 2017-24-03

a. $13,822 U

b. $14,052 U

c. $14,052 F

d. $13,822 F

Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 6.40 grams $8.00 per gram $51.20 Direct labor 0.35 hours $14.00 per hour $ 4.90 Variable overhead 0.35 hours $ 7.00 per hour $ 2.45

Explanation / Answer

Actual price is less than standard price. so it will be favourable

Material Price variance = Actual Quantity purchased* (Actual Price - Standard Price) Material Price variance = 23,424 * (($173,340/23,424) - $8) Material Price variance = $14,052 F

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