Sande Corporation makes a product with the following standard costs: In November the company's budgeted production was 2,900 units but the actual production was 3,000 units. The company used 27,670 grams of the direct material and 1,390 direct labor-hours to produce this output. During the month, the company purchased 31,700 grams of the direct material at a cost of $196,540. The actual direct labor cost was $29,607 and the actual variable overhead cost was $2,502.

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 November is:
A)$5,520 F
B)$6,340 F
C)$5,520 U
D)$6,340 U

Question

Sande Corporation makes a product with the following standard costs:

In November the company's budgeted production was 2,900 units but the actual production was 3,000 units. The company used 27,670 grams of the direct material and 1,390 direct labor-hours to produce this output. During the month, the company purchased 31,700 grams of the direct material at a cost of $196,540. The actual direct labor cost was $29,607 and the actual variable overhead cost was $2,502.

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 November 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 November is:
A)$5,520 F 
B)$6,340 F 
C)$5,520 U 
D)$6,340 U

Quizplus · Accepted Answer

Materials price variance = (AQ F1F1F1S1F1F1F10 AP)- (AQ F1F1F1S1F1F1F10 SP)
= $196,540 - (31,700 grams F1F1F1S1F1F1F10 $6.00 per gram)
= $196,540 - $190,200 = $6,340 U

Sande Corporation Makes a Product with the Following Standard Costs