JAX Inc. In early 2012, JAX Inc. had budgeted for the production and sales of 5,
ID: 2784157 • Letter: J
Question
JAX Inc. In early 2012, JAX Inc. had budgeted for the production and sales of 5,000 units at a sales price of $15 per unit. The following information is available regarding the standard cost for each unit: Direct materials: 1.50 pounds at $2.50 per lb Direct labor: 30 minutes of assembly at $.20 per minute Actual results for 2012 were determined to be as follows: Number of units produced and sold: 5,600 units Sales revenue: $100,800 ($18 per unit) Direct materials cost: $22,848 (9,520 lbs purchased and used at $2.40 per lb) Direct labor cost: $38,192 (173,600 minutes at $.22 per minute) Refer to the JAX Inc. information above. What was JAX Inc.'s direct materials usage variance for 2012? a. $2,800 U b. $2,688 F c. $2,688 U d. $2,800 F
Explanation / Answer
Answer is A
Material Usage Variance = (Standard Qty - Actual Qty ) x Standard Rate
= (1.50 x 5600 - 9520) x 2.50
= (8400 - 9520) x 2.50
= 2800 Unfav
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