Casteel Inc manufactures a single product in which variable

Casteel, Inc., manufactures a single product in which variable manufacturing overhead is assigned on the basis of standard direct labor-hours. The company uses a standard cost system and has established the following standards for one unit of product Question 2 Not yet Points out of 3 Standard Quantity Standard Price or Rate Standard Cost $4.50 $3.60 $0.75 PFlag question 1.5 pounds 0.6 hours 0.6 hours $3.00 per pound $6.00 per hour $1.25 per hour Direct materials Direct labor Variable manufacturing overhead During March, the following activity was recorded\'by the company : The company produced 3,200 units during the month. . A total of 8,100 pounds of material were purchased at a cost of $23,000. . There was no beginning inventory of materials on hand to start the month; at the end of the month, 3,900 pounds of material remained in the warehouse . During March, 1,600 direct labor-hours were worked at a rate of $6.50 per hour. + Variable manufacturing overhead costs during March totaled $1,800. The direct materials purchases varience is computed when the materials are purchased The materials quantity variance for March is: Select one O a. $-1,800.00 O b. $21,600.00 O c. $43,200.00 Od. $-3,600.00

Solution

Answer:

Material Quantity Variance = (AQ – SQ) * SP
Actual Quantity (AQ) used= Beginning Inventory + Purchases – Ending Inventory
Actual Quantity (AQ) used = 0 + 8,100 – 3,900
Actual Quantity (AQ) used= 4,200 Pounds

Standard Quantity (SQ) = 3,200 units * 1.5 pounds
Standard Quantity (SQ) = 4,800 Pounds

Standard Price (SP) = $3.00

Material Quantity Variance = (4,200 – 4,800) * 3.00
Material Quantity Variance = -1,800 or 1,800 F