Use the information below to answer the following question(s).Sawyer Industries Inc.(SII), developed standard costs for direct material and direct labour.In 2019, SII estimated the following standard costs for one of their major products, the 30-litre heavy-duty plastic container. During July 2020, SII produced and sold 10,000 containers using 2,200 kilograms of direct materials at an average actual cost per kilogram of $24 and 1,050 direct manufacturing labour hours at an average actual wage of $14.75 per hour.
-July's direct material flexible-budget variance is
A)$2,800 unfavourable.
B)$2,200 favourable.
C)$5,000 unfavourable.
D)$2,200 unfavourable.
E)$2,800 favourable.

Question

Use the information below to answer the following question(s).Sawyer Industries Inc.(SII), developed standard costs for direct material and direct labour.In 2019, SII estimated the following standard costs for one of their major products, the 30-litre heavy-duty plastic container.  During July 2020, SII produced and sold 10,000 containers using 2,200 kilograms of direct materials at an average actual cost per kilogram of $24 and 1,050 direct manufacturing labour hours at an average actual wage of $14.75 per hour.
-July's direct material flexible-budget variance is
A)$2,800 unfavourable. 
B)$2,200 favourable. 
C)$5,000 unfavourable. 
D)$2,200 unfavourable. 
E)$2,800 favourable.

Quizplus · Accepted Answer

July's actual direct material costs were $2,800 less than the flexible-budget amount. This means that July's direct material flexible-budget variance is $2,800 favourable.

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