Question

majer corporation makes a product with the following standard costs: standard quantity or hours standard price or rate standard cost per unit direct materials 3.0 ounces $ 8.50 per ounce $ 25.50 direct labor 0.8 hours $ 14.50 per hour $ 11.60 variable overhead 0.8 hours $ 7.00 per hour $ 5.60 the company reported the following results concerning this product in february. originally budgeted output 8,400 units actual output 8,200 units raw materials used in production 24,360 ounces actual direct labor-hours 6,760 hours purchases of raw materials 25,960 ounces actual price of raw materials $ 8.25 per ounce actual direct labor rate $ 15.60 per hour actual variable overhead rate $ 7.10 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 february is: multiple choice $6,490 u $8,130 f $6,490 f $8,130 u

Answer 1

The materials price variance for Majer Corporation in February is $6,490 favorable, calculated by subtracting the total amount spent on materials using the standard price from the amount spent using the actual price.

Step-by-step explanation:

The materials price variance can be calculated by comparing the actual price of materials purchased to the standard price. The formula for the materials price variance is (Actual Quantity Purchased × Actual Price) - (Actual Quantity Purchased × Standard Price).

For Majer Corporation, the calculation is as follows:

(25,960 ounces × $8.25 per ounce) - (25,960 ounces × $8.50 per ounce) = $214,140 - $220,660 = -$6,520.

Since the actual price is less than the standard, it is a favorable variance. Thus, the materials price variance for February is $6,490 favorable.