Question

Bulluck Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 3.5 grams 1.00 per gram Direct labor e.7 hours $11.00 per hour Variable overhead e.7 hours $2.00 per hour The company reported the following results concerning this product in July. 3,e0e units 11,370 grams 1,910 hours 12,100 grams 1.20 per gram $11.40 per hour $ 2.10 per hour Actual output Raw materials used in production Actual direct labor-hours Purchases of raw materials Actual price of raw materials purchased Actual direct labor rate Actual variable overhead rate The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases The materials quantity variance for July is:

$870 U

$1044 U

$870 F

$1044 F

Answer 1

OPTION: 870 U

EXPLANATION:

Material quantity variance = standard price x (standard quantity - actual quantity used)

= $1 x (10500 - 11370)

= $870 Unfavorable

Where,

Standard quantity = actual output x standard quantity per unit of output

= 3000 x 3.5 = 10500 gram