Milar Corporation makes a product with the following standard costs: Standard Qu
ID: 2396271 • Letter: M
Question
Milar Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 7.7 pounds $ 4.00 per pound Direct labor 0.1 hours $ 20.00 per hour Variable overhead 0.1 hours $ 4.00 per hour In January the company produced 2,000 units using 16,060 pounds of the direct material and 210 direct labor-hours. During the month, the company purchased 16,900 pounds of the direct material at a cost of $65,910. The actual direct labor cost was $4,473 and the actual variable overhead cost was $756. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. 6) The materials quantity variance for January is: A) $2,640 U B) $2,574 F C) $2,640 F D) $2,574 U 7) The materials price variance for January is: A) $1,690 U B) $1,540 F C) $1,540 U D) $1,690 F 8) The labor efficiency variance for January is: A) $200 U B) $213 U C) $200 F D) $213 F
Explanation / Answer
Materials quantity variance = 4*(16060-2000*7.7)= $2640 U Materials price variance for January = 65910-(16900*4)= $1690 F Labor efficiency variance = 20*(210-2000*0.1)= $200 U