Question

33.

Gilder Corporation makes a product with the following standard costs:

	Standard Quantity or Hours		Standard Price or Rate			Standard Cost Per Unit
Direct materials	7.90	grams	$	10.00	per gram	$	79.00
Direct labor	0.15	hours	$	28.00	per hour	$	4.20
Variable overhead	0.15	hours	$	8.00	per hour	$	1.20

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

Originally budgeted output	4,800	units
Actual output	5,040	units
Raw materials used in production	37,492	grams
Purchases of raw materials	41,792	grams
Actual direct labor-hours	670	hours
Actual cost of raw materials purchases	$392,840
Actual direct labor cost	$18,164
Actual variable overhead cost	$3,028

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:

rev: 11_26_2016_QC_CS-71059

$240 U

$22,980 F

$23,240 U

$23,240 F

Answer 1

Standard Quantity or Hours
Direct materials (Grams)	7.9
Standard Price or Rate	$                          10.00
Standard Cost Per Unit	$                          79.00
Originally budgeted output	4,800	units
Actual output	5,040	units
Raw materials used in production	37,492	grams
Purchases of raw materials	41,792	grams
Actual direct labor-hours	670	hours
Actual cost of raw materials purchases	$392,840
Actual direct labor cost	$18,164
Actual variable overhead cost	$3,028
Formula to compute raw material quanity variance = Standard Price *( Actuals quantity-Standard quantity)
Actuals output	5,040
Standard Quanity = 5040*7.9	39816
Actuals quantity used	37,492
Standard rate	$                          10.00
Material quanity variance =	=10*(37492-39816)	(23,240)	Favourable
Hence correct answer is Option 4	$23,240 F