Question

Tharaldson Corporation makes a product with the following standard costs:

Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit
Direct materials 7.4 ounces $2.00 per ounce $14.80
Direct labor 0.3 hours $18.00 per hour $5.40
Variable overhead 0.3 hours $7.00 per hour $2.10

The company reported the following results concerning this product in June.

Originally budgeted output 2,800 units
Actual output 2,900 units
Raw materials used in production 20,600 ounces
Purchases of raw materials 21,700 ounces
Actual direct labor-hours 490 hours
Actual cost of raw materials purchases $42,200
Actual direct labor cost $12,800
Actual variable overhead cost $3,400

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 quantity variance for June is:__________

Answer 1

Tharaldson Corporation

The materials quantity variance for June is:__________

= $1,480

Step-by-step explanation:

a) Data and Calculations:

Standard Quantity Standard Price Standard Cost

or Hours or Rate Per Unit

Direct materials 7.4 ounces $2.00 per ounce $14.80

Direct labor 0.3 hours $18.00 per hour $5.40

Variable overhead 0.3 hours $7.00 per hour $2.10

Reported Results in June:

Originally budgeted output 2,800 units

Actual output 2,900 units

Raw materials used in production 20,600 ounces

Purchases of raw materials 21,700 ounces

Actual direct labor-hours 490 hours

Actual cost of raw materials purchases $42,200

Actual direct labor cost $12,800

Actual variable overhead cost $3,400

Materials quantity variance = (Actual quantity - Budgeted quantity) * standard rate

= (2,900 - 2,800) * $14.80

= $1,480

= (2,900 - 2,800) * 7.4 * $2