Question

In: Accounting

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

Oddo Corporation makes a product with the following standard costs:
Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit
  Direct materials 3.0 ounces    $8.90 per ounce $26.70          
  Direct labor 0.7 hours    $25.00 per hour $17.50          
  Variable overhead 0.6 hours    $4.00 per hour $2.40          
The company reported the following results concerning this product in December.
  Originally budgeted output 4,590   units
  Actual output 4,390   units
  Raw materials used in production 13,490   ounces
  Actual direct labor-hours 2,954   hours
  Purchases of raw materials 15,360   ounces
  Actual price of raw materials $8.70   per ounce
  Actual direct labor rate $20.20   per hour
  Actual variable overhead rate $4.10   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 quantity variance for December is:

A. $2,848 U

B. $2,784 F

C. $2,848 F

D. $2,784 U

Solutions

Expert Solution

Answer:-

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

                                              =(13170 ounces – 13490 ounces)*$8.90 per ounce

                                             = $2848 Unfavourable

Where:-

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

                             =3 ounces per unit *4390 units =13170 ounces


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