Oddo Corporation makes a product with the following standard costs Standard Quan
ID: 2519976 • Letter: O
Question
Oddo Corporation makes a product with the following standard costs Standard Quantity or Standard Price or Standard Cost Per Unit Direct materials Direct labor Varlable overhead Hours 3.0 ounces 0.6 hours 06 hours Rate $4.50 per ounce $10.50 per hour $3.00 per hour $6.30 $1.80 The company reported the following results concerning this product in December. Originally budgeted output Actual output Raw materials used In production Actual direct labor-hours Purchases of raw materials Actual price of raw materials Actual direct labor rate Actual varlable overhead rate 5,000 units 15,080 ounces 3,200 hours 16.680 |ounces 425 per ounce 10.30 per hour 3.30 per hour The company applies vartable overhead on the basis of direct labor-hours. The direct materials purchases vartance is computed when the materials are purchased The materlals price varlance for December is O $3.410 U O $3.410 F O $4,170 F O $4,170 UuExplanation / Answer
The materials price variance for December is:
$ 4,170 F
Direct Materials Price Variance = [Actual Quantity x Actual Price] (-) [Actual Quantity x Standard Price]
= Actual Quantity x (Actual Price - Standard Price)
= 16,680 ounces x ($ 4.25 - $ 4.50)
= $ 4,170 Favorable
Actual Quantity is the quantity purchased as the direct materials purchase variance is computed when the materials are purchased.