Question

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   5.3 grams     $7.00 per gram $37.10          
  Direct labor   1.6 hours     $18.00 per hour $28.80          
  Variable overhead   1.6 hours     $7.00 per hour $11.20          


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 28,470   grams
  Purchases of raw materials 32,700   grams
  Actual direct labor-hours 5,400   hours
  Actual cost of raw materials purchases $232,170   
  Actual direct labor cost $102,060   
  Actual variable overhead cost $36,180   

    

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:

$8,591 F

$8,470 U

$8,470 F

$8,591 U

Solutions

Expert Solution

Ans is $8470 F

Working:-
Standard quantity 5.3*5600
29680
Actual quantity 28470
Standard price 7
DM efficiency variance/ Qty = (AQ-SQ)SP
= (28470-29680)*7
= -8470
Since actual cost is less than Standard cost, therefore it is favorable
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