Handerson Corporation makes a product with the following standard costs: The com

Question

Handerson Corporation makes a product with the following standard costs:

The company reported the following results concerning this product in August.

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 August is:

$5,440 F

$6,320 F

$5,440 U

$6,320 U

Standard Quantity or Hours Standard Price or Rate Direct materials 8.5 kilos $ 6.00 per kilo Direct labor 0.4 hours $ 20.00 per hour Variable overhead 0.4 hours $ 6.00 per hour

Explanation / Answer

Materials price variance for August = 195920-(31600*6)= 6320 U Option 4 is correct

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