Question

Question 3 5.52 pts Kartman Corporation makes a product with the following standard costs: 7.00 Per Standard Quantity or Standard Cost Hours Standard Price or Rate Per Unit Direct materials 6.5pounds $ $ 45.50 pound Direct labor 0.6hours $ 24.00per hour $ 14.40 Variable overhead 0.6hours $ 4.00per hour $ 2.40 In June the company's budgeted production was 3.400 units but the actual production was 3,500 units. The company used 22,150 pounds of the direct material and 2,290 direct labor-hours to produce this output. During the month, the company purchased 25,400 pounds of the direct material at a cost of $170,180. The actual direct labor cost was $57,021 and the actual variable overhead cost was $8.931. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased, The materials price variance for June is: $7,6200 $7.6207 O S6,8250 O $6,825 F

Answer 1

Computation of Direct material Price Variance:

Direct material Price Variance = (Standard Price-Actual Price)*Actual Quantity purchased

Standard price per pound Actual Price per pound Actual pounds Purchased A B = $170,180/25,400 с $7.00 $6.70 25,400 Direct material Price Variance (A-B)*C $7,620 i.e. Favorable

Hence, Option b i.e. $7,620 F is the correct answer.