Mid City Products Inc. (MCP), developed standard costs for direct material and direct labor. In 2017, MCP estimated the following standard costs for one of their most popular products.

During September, MCP produced and sold 1,000 units using 1,300 pounds of direct materials at an average cost per pound of $5.00 and 480 direct labor hours at an average wage of $13.15 per hour.
September's direct material flexible-budget variance is ________.
A) $400 unfavorable
B) $120 favorable
C) $1,100 unfavorable
D) $520 favorable

Question

Mid City Products Inc. (MCP), developed standard costs for direct material and direct labor. In 2017, MCP estimated the following standard costs for one of their most popular products.

During September, MCP produced and sold 1,000 units using 1,300 pounds of direct materials at an average cost per pound of $5.00 and 480 direct labor hours at an average wage of $13.15 per hour.
September's direct material flexible-budget variance is ________.
A) $400 unfavorable 
B) $120 favorable 
C) $1,100 unfavorable 
D) $520 favorable

Quizplus · Accepted Answer

Direct material flexible-budget variance = (1,300 × $5.00) - (1,000 × 1 × $5.40) = $1,100 U