Question

Preble Company manufactures one product. Its variable manufacturing overhead is applied to production based on direct labour-hours, and its standard costs per unit are as follows: 55.00 36.00 Direct materials: 5 $ kg at $11.00 per kg Direct labour: 3 hours at $12 per hour Variable overhead: 3 hours at $7 per hour 21.00 $ 112.00 Total standard cost per unit The company planned to produce and sell

Answer 1

Standard price = $11 per kg.

Standard quantity per unit = 5 kg.

Actual output = 26,600 units

Standard quantity for actual output = Standard quantity per unit x Actual output

= 5 x 26,600

= 133,000

Actual quantity = 154,000 kg.

Direct material quantity variance = Standard price x (Standard quantity - Actual quantity)

= 11 x (133,000 - 154,000)     

= $231,000 (Unfavorable)

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