Question

Dirickson Inc. has provided the following data concering one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours, Inputs Direct materials Direct labor Variable manufacturing overhead Standard Quantity or Hours per Unit of Output Standard Price or Rate 7.6 ounces $ 9.40 per ounce 0.10 hours $18.00 per hour 0.10 hours $ 5.30 per hour The company has reported the following actual results for the product for July Actual output Raw materials purchased Actual cost of raw materials purchased Raw materials used in production Actual direct labor-hours Actual direct labor cost Actual variable overhead cost 7,600 units 63,000 ounces $541,800 57,750 ounces 820 hours $ 16,072 $ 4,592 The raw materials price variance for the month is closest to

$46200 U

$50400 F

$46200 F

$50400 U

Answer 1

Answer : C = $ 46,200 Favorable

>> Material price variance = ( Standard price - Actual price ) * Actual Quantity.

>> Actual price = ( $ 541,800 / 63,000 ) = $ 8.6

>> Material Price Variance = ( $ 9.4 - $ 8.6 ) * 57,750.

>> Material price variance = $ 46,200 Favorable