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Martin Racing Company Gathered the Following Actual Results for the Current

Question 38

Multiple Choice

Martin Racing Company gathered the following actual results for the current month:
 Actual amounts:  Units produced 3,000 Direct materials purchased and used (5,400 pounds ) $21,600 Direct labor cost (4,600 hours)  $36,800 Manufacturing overhead costs incurred $17,650\begin{array} { | l | r | } \hline \text { Actual amounts: } & \\\hline \text { Units produced } & 3,000 \\\hline \text { Direct materials purchased and used } ( 5,400 \text { pounds } ) & \$ 21,600 \\\hline \text { Direct labor cost (4,600 hours) } & \$ 36,800 \\\hline \text { Manufacturing overhead costs incurred } & \$ 17,650 \\\hline\end{array} Budgeted production and standard costs were:
 Budgeted production 3,500 units  Direct materials 2 pounds per unit at $4.25 per pound  Direct labor 1.5 hours per unit at $7.50 per hour  Variable manufacturing overhead $5 per unit  Fixed manufacturing overhead $21,000\begin{array} { | l | l | } \hline \text { Budgeted production } & 3,500 \text { units } \\\hline \text { Direct materials } & 2 \text { pounds per unit at } \$ 4.25 \text { per pound } \\\hline \text { Direct labor } & 1.5 \text { hours per unit at } \$ 7.50 \text { per hour } \\\hline \text { Variable manufacturing overhead } & \$ 5 \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 21,000 \\\hline\end{array} What is the direct materials price variance?


A) $2,400 unfavorable
B) $1,350 favorable
C) $2,400 favorable
D) $1,350 unfavorable

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