Problem 6 20 points The Apoundright Company uses standard co

Problem 6 (20 points) The Apoundright Company uses standard costing and has establis for its single product: Direct materials: 4 gallons at $8 per gallon Direct labor: 1.0 hours at $16 per hour Variable overhead: 0.5 hours at $8 per hour During November, the company made 6,000 units and incurred the following Direct materials purchased: 26,800 gallons at $8.20 per gallorn Direct materials used: 25,200 gallons Direct labor used: 5,600 hours at $15.30 per hour Actual variable overhead: $23,800 The company applies variable overhead to products on the basis of standard direct labor- hours. The materials price variance for November was: A. $5,360 F B. $5,360 U C. $5,040 F D. $5,040 U The materials quantity variance for November was: A. $22,960 U B. S2 2,400 U c. $9,600 U D. $9,840 U AQ x AP AQ x SP (for qty) AQxSP (for price) SQ x SP Price Variance Quantity Variance

Solution

Std qty alowed for actual output (6000*4): 24000 gallons Std price per gallon: $ 8 per gallon Actual Qty purchased: 26800 gallons Actual Qty used: 25200 gallons Actual price per gallon: 8.20 per gallon Material Price variannce: AQ*SP - AQ * AP 26800 * 8.00- 26800 *8.20 = 5360 Unfav Material Quantity Variance: SQ*SP -AQ*SP 24000 *8 - 25200 *8 = 9600 Unfav Q1. Answer is B. $ 5360 U Q2. Answr is C. $ 9600 U