Question

Scentsational Inc. produces a lavender air-freshener unit. They have developed standard costs for one unit as follows:

	Standard quantity or hours per unit	Standard price or rate	Standard cost
Direct materials	0.4 ounces	$12.50 per ounce	$5.00
Direct labor	2.1 dlh	$14.00 per dlh	$29.40
Variable manufacturing overhead	2.1 dlh	$3.50 per dlh	$7.35

During May, the following activities were recorded related to the production of the air-freshener:

a) The company purchased 14,550 ounces of direct materials at a unit cost of $13.50 per ounce.

b) There was no beginning inventory of direct materials, but there was ending inventory of 1,540 ounces.

c) The company’s production-line assemblers worked for 70,000 hours. They were paid a wage rate of $13.00 per hour.

e) Variable manufacturing overhead is allocated on the basis of direct labor hours. The total VMOH cost for the month was $210,000.

f) 35,000 units were produced and sold during May.

What was the direct materials price variance for May?

Multiple Choice

• $35,000 U

• $14,550 U

• $13,010 U

• $21,425 U

Answer 1

Correct answer-------------------$14,550 U

Working

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                  12.50	-	$                      13.50	)	x	14550
	-14550
	Variance		$             14,550.00			Unfavourable-U

answered by: anonymous