Machine Builders Inc. adopted a standard cost system several years ago that it uses in...
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Accounting
Machine Builders Inc. adopted a standard cost system several years ago that it uses in conjunction with its process cost system. The per-unit standard costs for direct materials and direct labor for its single product are as follows:
Materials:
(7 kilograms $10 per kilogram)
$
70
Labor:
(4 hours $19 per hour)
$
76
All materials are issued at the beginning of processing. The operating data shown below were taken from the records for July:
In-process beginning inventory
none
In-process ending inventory90% complete as to labor
1,500
units
Units completed during the month
6,570
units
Budgeted output
7,300
units
Purchases of materials, in kilograms (AQ)
26,000
Total actual labor costs incurred
$
524,000
Direct labor hours worked (AQ)
25,000
hours
Materials purchase-price variance
$
2,600
unfavorable
Increase in materials inventory in July
1,700
kilograms
Beginning inventory of materials
0
kg.
The direct labor flexible-budget variance for July, to the nearest dollar, was:
Multiple Choice
$26,320 unfavorable.
$85,120 favorable.
$26,920 unfavorable.
$77,920 favorable.
$70,720 favorable.
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