Question

US-based Chilé Products Ltd. bottles and sells hot pepper sauce. In 2009, the company had expected to sell 60 000 bottles but actually bottled and sold 70 000 bottles. The standard direct materials cost for each bottle is $0.36 comprised of 0.80 ounces at a cost of $0.45 per ounce. During 2009, 68 000 ounces of material were purchased out of which 52 000 ounces were used at a cost of $0.32 per ounce.

The direct materials usage variance for 2009 was:

$4 500 F

$450 U

$4 200 U

$1800 F

Answer 1