A company uses the following standard costs to produce a single unit of output D

Question

A company uses the following standard costs to produce a single unit of output Direct saterials Direct labor Manafacturing overhead .3 hour at $4.00 per hour $1.20 8 pounds at $0.80 per pound 0.3 hour at $9.00 per hour = $6.40 $2.70 During the latest month, the company purchased and used 78.000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $24.310 based on 2.860 direct labor hours worked. Variable manufacturing overhead costs incurned totaled $9,000 and fosed manufacturing overhead incurred was $13,000. Based on his information the total direct materials cost variance for the month 5800 K. commandoption ption command

Explanation / Answer

Answer is 14000 Unfav

Total Material Cost Variance = Standard Cost - Actual Cost

= Standard Rate x Standard Quantity - Actual Quantity x Actual Rate

= 0.8 x (10000 x 8) - 78000 x 1

= 64000 - 78000

= 14000 Unfav

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