Question
In: Accounting
Barry Company budgeted the cost of materials for August to be $60,000 for 10,000 units produced....
Barry Company budgeted the cost of materials for August to be $60,000 for 10,000 units produced. Barry used the following standard cost per unit to prepare the August budget:
2 ounces of materials at $3.00 per ounce
In August, Barry produced 8,000 units at a total cost of $49,280. Each unit required 2.2 ounces of materials. What is the materials usage variance for August?
| A. |
$4,800 U |
|
| B. |
$7,200 U |
|
| C. |
$1,280 U |
|
| D. |
$3,520 U |
|
| E. |
$10,720 U |
Solutions
Expert Solution
Answer: A
Standard usage = Actual units of production × Standard materials per unit
= 8000 × 2
= 16000 ounces
Actual usage = Actual units of production × Actual materials per unit
= 8000 × 2.2
= 17600 ounces
Usage variance = (Standard usage – Actual usage) × Standard price
= (16000 – 17600) × $3
= 1600 × 3
= 4,800 unfavorable
Note: Since actual usage is higher than standard usage, there is unfavorable variance.
ekkarill92 answered 2 years agoRelated Solutions
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