Acme Company’s production budget for August is 18,100 units and includes the fol

Question

Acme Company’s production budget for August is 18,100 units and includes the following component unit costs: direct materials, $8.00; direct labor, $10.50; variable overhead, $6.50. Budgeted fixed overhead is $38,000. Actual production in August was 19,872 units. Actual unit component costs incurred during August include direct materials, $9.00; direct labor, $10.00; variable overhead, $7.50. Actual fixed overhead was $40,100. The standard direct material cost per unit consists of 8 pounds of raw material at $1 per pound. During August, 223,560 pounds of raw material were used that were purchased at $0.80 per pound.

Required:

Calculate the materials price variance and materials usage variance for August. (Do not round intermediate calculations. Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance).)

Explanation / Answer

Materials price variance = AQ*(AP-SP) = 223560*(0.8-1)= $44712 F Materials usage variance = SP*(AQ-SQ) = 1*(223560-19872*8)= $64584 U

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.