Handerson Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in August.
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 quantity variance for August is:
A) $10,980 F
B) $11,346 U
C) $10,980 U
D) $11,346 F

Question

Handerson Corporation makes a product with the following standard costs:
  The company reported the following results concerning this product in August.
  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 quantity variance for August is:
A) $10,980 F 
B) $11,346 U 
C) $10,980 U 
D) $11,346 F

Quizplus · Accepted Answer

SQ = 3,200 units × 8.5 kilos per unit = 27,200 kilos
Materials quantity variance = (AQ - SQ) × SP
= (29,030 kilos − 27,200 kilos) × $6.00 per kilo
= (1.830 kilos) × $6.00 per kilo
= $10,980 U

Handerson Corporation Makes a Product with the Following Standard Costs