Milar Corporation makes a product with the following standard costs: In January
ID: 2588905 • Letter: M
Question
Milar Corporation makes a product with the following standard costs:
In January the company produced 4,800 units using 10,240 pounds of the direct material and 2,220 direct labor-hours. During the month, the company purchased 10,810 pounds of the direct material at a cost of $76,690. The actual direct labor cost was $38,234 and the actual variable overhead cost was $11,935.
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 January is:
Standard Quantity orHours Standard Price or
Rate Direct materials 2.0 pounds $ 7.00 per pound Direct labor 0.6 hours $ 18.00 per hour Variable overhead 0.6 hours $ 2.00 per hour
Explanation / Answer
material price variance (Actual rate - standard rate)*AQ purchased (76,690 - 10810*7) 1020 U