Tharaldson Corporation makes a product with the following standard costs:

Tharaldson Corporation makes a product with the following standard costs:

	Standard Quantity or Hours			Standard Price or Rate			Standard Cost Per Unit
Direct materials		5.7	ounces	$	6.00	per ounce	$	34.20
Direct labor		0.8	hours	$	11.00	per hour	$	8.80
Variable overhead		0.8	hours	$	6.00	per hour	$	4.80

The company reported the following results concerning this product in June.

 

Originally budgeted output		3,900	units
Actual output		3,500	units
Raw materials used in production		22,500	ounces
Purchases of raw materials		20,600	ounces
Actual direct labor-hours		6,000	hours
Actual cost of raw materials purchases	$	42,400
Actual direct labor cost	$	13,900
Actual variable overhead cost	$	3,950

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 June is:

Multiple Choice

• $5,249 U
• $5,249 F
• $15,300 F
• $15,300 U

  Correct

Explanation

SQ = 3,500 units × 5.7 ounces per unit = 19,950 ounces

Materials quantity variance = (AQ – SQ) × SP

= (22,500 ounces − 19,950 ounces) × $6.00 per ounce

= (2,550 ounces) × $6.00 per ounce

= $15,300 U