Allan Company
Allan Company manufactures overalls. During the year, it manufactured 125,000 overalls, using 2.9 hours of direct labour per unit at a rate of $6.25 per hour. The materials and labour standards for manufacturing the overalls are as follows: $\begin{array}{lll}
\text {Direct materials ( $ 5 \mathrm{~m} $ of denim $ @ \$ 2 $ per metre) }&\$10\
\text {Direct labour (3 hours $ @ \$ 6 $ per }&18\
\end{array}$
The company required 600,000 m at $1.95 per metre to make the 125,000 overalls.There were no beginning or ending inventories.
-Refer to Allan Company. What is the materials price variance?
A) $30,000 U
B) $30,000 F
C) $31,250 U
D) $31,250 F

Question

Allan Company
Allan Company manufactures overalls. During the year, it manufactured 125,000 overalls, using 2.9 hours of direct labour per unit at a rate of $6.25 per hour. The materials and labour standards for manufacturing the overalls are as follows: $\begin{array}{lll}
\text {Direct materials ( $ 5 \mathrm{~m} $ of denim $ @ \$ 2 $ per metre) }&\$10\
\text {Direct labour (3 hours $ @ \$ 6 $ per  }&18\
\end{array}$
 The company required 600,000 m at $1.95 per metre to make the 125,000 overalls.There were no beginning or ending inventories.
-Refer to Allan Company. What is the materials price variance?
A) $30,000 U
B) $30,000 F
C) $31,250 U
D) $31,250 F

Quizplus · Accepted Answer

The materials price variance is calculated as (Actual Price - Standard Price) x Actual Quantity. Here, it is ($1.95 - $2.00) x 600,000 m = $30,000 F (Favorable).

Allan Company Allan Company Manufactures Overalls The Company Required 600,000 M at $1

Allan Company
Allan Company Manufactures Overalls The Company Required 600,000 M at $1