Question

Milar Corporation makes a product with the following standard costs:

	Standard Quantity or Hours			Standard Price or Rate
Direct materials		2.0	pounds	$	7.00	per pound
Direct labor		0.6	hours	$	14.00	per hour
Variable overhead		0.6	hours	$	6.00	per hour

In January the company produced 4,600 units using 10,120 pounds of the direct material and 2,100 direct labor-hours. During the month, the company purchased 10,690 pounds of the direct material at a cost of $76,570. The actual direct labor cost was $38,256 and the actual variable overhead cost was $11,957.

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 price variance for January is

Answer 1

Material price variance = $ 1,740 Unfavorable

Working

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$                    7.00	-	$                     7.16	)	x	10690
	-1740
	Variance		$             1,740.00			Unfavourable-U

.

Actual DATA for		4600	Units
	Quantity (AQ)	Rate (AR)	Actual Cost
Direct Material	10690	$            7.16*	$          76,570.00

*76570/10690