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In: Accounting

Gilder Corporation makes a product with the following standard costs:     Standard Quantity or Hours Standard...

Gilder Corporation makes a product with the following standard costs:

   

Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit
  Direct materials   5.5 grams     $4.00 per gram $22.00          
  Direct labor   1.8 hours     $20.00 per hour $36.00          
  Variable overhead   1.8 hours     $9.00 per hour $16.20          


The company reported the following results concerning this product in June.

    

  Originally budgeted output 5,700   units
  Actual output 5,600   units
  Raw materials used in production 28,490   grams
  Purchases of raw materials 32,900   grams
  Actual direct labor-hours 5,600   hours
  Actual cost of raw materials purchases $134,890   
  Actual direct labor cost $117,040   
  Actual variable overhead cost $48,720   

    

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 quantity variance for June is:

A. $9,240 U

B. $9,471 F

C. $9,240 F

D. $9,471 U

Solutions

Expert Solution

Answer:-

Material Quantity variance = (Standard Quantity- Actual Quantity)*Standard price

                                              =(30800 grams – 28490 grams)*$4.00 per gram

                                             = $9240 Favourable

Where:-

Standard Quantity = No. of grams per unit*Actual output

                             =5.5 grams per unit *5600 units =30800 grams

ekkarill92 answered 2 years ago
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