A company uses the following standard costs to produce a single unit of output. $$\begin{array} { l l l }
\text { Direct materials } & 6 \text { pounds at } \$ 0.90 \text { per pound } & = \$ 5.40 \
\text { Direct labor } & 0.5 \text { hour at } \$ 12.00 \text { per hour } & = \$ 6.00 \
\text { Manufactuning overhead } & 0.5 \text { hour at } \$ 4.80 \text { per hour } & = \$ 2.40
\end{array}$$ During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled
$56,350 based on 4,900 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400.
-Based on this information, the total direct materials cost variance for the month was:

Question

A company uses the following standard costs to produce a single unit of output. $$\begin{array} { l l l } 
\text { Direct materials } & 6 \text { pounds at } \$ 0.90 \text { per pound } & = \$ 5.40 \
\text { Direct labor } & 0.5 \text { hour at } \$ 12.00 \text { per hour } & = \$ 6.00 \
\text { Manufactuning overhead } & 0.5 \text { hour at } \$ 4.80 \text { per hour } & = \$ 2.40
\end{array}$$ During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled
$56,350 based on 4,900 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. 
-Based on this information, the total direct materials cost variance for the month was:

Quizplus · Accepted Answer

The total direct materials cost variance is calculated as the difference between the actual cost and the standard cost. The actual cost is 58,000 pounds at $1.00 per pound, totaling $58,000. The standard cost for 10,000 units is 60,000 pounds (10,000 units x 6 pounds) at $0.90 per pound, totaling $54,000. The variance is $58,000 - $54,000 = $4,000 unfavorable.

A Company Uses the Following Standard Costs to Produce a Single