Kibodeaux Corporation makes a product with the following standard costs: The company budgeted for production of 3,300 units in June, but actual production was 3,400 units. The company used 33,240 liters of direct material and 320 direct labor-hours to produce this output. The company purchased 35,900 liters of the direct material at $4.90 per liter. The actual direct labor rate was $22.70 per hour and the actual variable overhead rate was $2.70 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 price variance for June is:
A)$3,332 F
B)$3,590 U
C)$3,332 U
D)$3,590 F

Question

Kibodeaux Corporation makes a product with the following standard costs:

The company budgeted for production of 3,300 units in June, but actual production was 3,400 units. The company used 33,240 liters of direct material and 320 direct labor-hours to produce this output. The company purchased 35,900 liters of the direct material at $4.90 per liter. The actual direct labor rate was $22.70 per hour and the actual variable overhead rate was $2.70 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 price variance for June is:

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 price variance for June is:
A)$3,332 F 
B)$3,590 U 
C)$3,332 U 
D)$3,590 F

Quizplus · Accepted Answer

Materials price variance = AQ (AP - SP)
= 35,900 liters ($4.90 per liter - $5.00 per liter)
= 35,900 liters (-$0.10 per liter)= $3,590 F

Kibodeaux Corporation Makes a Product with the Following Standard Costs