In early 2009, JAX Inc. had budgeted for the production and sales of 6,000 units
ID: 2343632 • Letter: I
Question
In early 2009, JAX Inc. had budgeted for the production and sales of 6,000 units at a sales price of $20 per unit. The following information is available regarding the standard cost for each unit:Direct materials:
2 pounds at $3.00 per lb
Direct labor:
30 minutes of assembly at $.25 per minute
Actual results for 2009 were determined to be as follows:
Number of units produced
and sold:
6,800 units
Sales revenue:
$149,600 ($22 per unit)
Direct materials cost:
$ 43,384 (14,960 lbs purchased and used at $2.90 per lb)
Direct labor cost:
$ 59,024 (210,800 minutes at $.28 per minute)
What was JAX Inc.'s direct materials price variance for 2009?
Answer
a. $1,496F
b. $1,496U
c. $1,360F
d. $1,360U
Explanation / Answer
Direct material price variance = (Standard Price - Actual Price) x Actual Quantity = (3 - 2.9) x 14960 = $1496 F Hope this helps!