Question

Pippin Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours. Inputs Standard Quantity or Hours per Unit of Output Standard Price or Rate Direct materials 5.0 grams $ 7.00 per gram Direct labor 0.30 hours $ 21.30 per hour Variable manufacturing overhead 0.30 hours $ 9.60 per hour The company has reported the following actual results for the product for June: Actual output 8,500 units Raw materials purchased 48,100 grams Actual price of raw materials $ 7.70 per gram Raw materials used in production 42,490 grams Actual direct labor-hours 2,300 hours Actual direct labor rate $ 21.70 per hour Actual variable overhead rate $ 9.80 per hour The raw materials quantity variance for the month is closest to: Multiple Choice $77 F $70 U $77 U $70 F

Answer 1

Answer:

Option (D) is correct.

Explanation:

Raw materials quantity variance:

= Standard price of direct material × (Raw materials used in production - Actual output × Standard quantity per unit of output of direct material)

= 7 × (42,490 - 8,500 × 5)

= 70 Favorable

Therefore, the raw materials quantity variance for the month is closest to 70 favorable.