Answer the following question(s)using the information below.Apple Valley Orchards, Inc.(AVO), developed standard costs for direct material and direct labour.In 2019, AVO estimated the following standard costs for one of their most well loved products, the AVO classic Grandma's large apple pie which had a brown sugar coating on the top of the crust as well as including cranberry and mince ingredients in addition to the apples. During September 2020, AVO produced and sold 1,200 pies using 1,875 kilograms of direct materials at an average cost per kilogram of $7.00 and 280 direct labour hours at an average wage of $14.25 per hour.
-September's direct material rate variance is
A)$468.75 favourable.
B)$300.00 favourable.
C)$468.75 unfavourable.
D)$450.00 favourable.
E)$300.00 unfavourable.

Question

Answer the following question(s)using the information below.Apple Valley Orchards, Inc.(AVO), developed standard costs for direct material and direct labour.In 2019, AVO estimated the following standard costs for one of their most well loved products, the AVO classic Grandma's large apple pie which had a brown sugar coating on the top of the crust as well as including cranberry and mince ingredients in addition to the apples.  During September 2020, AVO produced and sold 1,200 pies using 1,875 kilograms of direct materials at an average cost per kilogram of $7.00 and 280 direct labour hours at an average wage of $14.25 per hour.
-September's direct material rate variance is
A)$468.75 favourable. 
B)$300.00 favourable. 
C)$468.75 unfavourable. 
D)$450.00 favourable. 
E)$300.00 unfavourable.

Quizplus · Accepted Answer

The direct material rate variance is calculated as (Actual Price - Standard Price) x Actual Quantity. The given variance is $468.75 favourable, indicating that the actual price was lower than the standard price.

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