Galla Corporation makes a product with the following standard costs: Standard Qu
ID: 2488097 • Letter: G
Question
Galla Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 8.2 pounds $7.00 per pound $57.40 Direct labor 0.4 hours $20.00 per hour $8.00 Variable overhead 0.4 hours $2.00 per hour $0.80 The company budgeted for production of 2,400 units in June, but actual production was 2,500 units. The company used 19,850 pounds of direct material and 980 direct labor-hours to produce this output. The company purchased 21,700 pounds of the direct material at $6.70 per pound. The actual direct labor rate was $19.20 per hour and the actual variable overhead rate was $1.80 per hour. 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: $6,150 F $6,150 U $6,510 F $6,510 U Please show work. Thanks!
Explanation / Answer
Material price variance = (Standard price-actual price)Actual quantity
= (7-6.70)*21700
Material price variance = 6510 F
So answer is c) 6510 F