Question

Bite Grill, a fast-food restaurant, includes hamburgers as one of its menu items, with meat being a major material in hamburgers. In the month ending in December, the company manufactured and sold 500 hamburgers, using 400 pounds of meat and 16 hours of direct labor. The meat actaully costs the company $1,300 and the direct labor actually costs the company $240.

As per the standard cost card, each hamburger requires 0.75 pounds of meat, at a cost of $3.50 per pound and each hamburger requires 0.04 hours of direct labor, at a cost of $14 per hour.
The direct materials flexible budget variance would be closest to:




$12.5 F


300 U


$87.5 U


$87.5 F


$300 F

Answer 1

The direct materials flexible budget variance for Bite Grill's hamburgers is calculated by comparing the standard and actual costs for the quantity of meat actually used. A calculation shows the variance to be $12.5 favorable, indicating the actual cost was less than the standard cost.

Step-by-step explanation:

To calculate the direct materials flexible budget variance for Bite Grill's hamburgers, we need to compare the actual cost of the material used to the standard cost for the actual quantity used. The standard cost is based on the planned cost for materials set by the company's cost standards, while the actual cost reflects what the company actually paid when purchasing the materials.

The calculation of the direct materials flexible budget variance is as follows:

• Standard quantity of meat for 500 hamburgers: 500 hamburgers × 0.75 pounds per hamburger = 375 pounds.
• Standard cost of 375 pounds of meat: 375 pounds x $3.50 per pound = $1,312.50.
• Actual cost of 400 pounds of meat: $1,300.
• Direct materials flexible budget variance: $1,312.50 (standard cost) - $1,300 (actual cost) = $12.5 F.

The variance is favorable because the actual cost of meat was less than the standard cost for the actual quantity of meat used.