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:
(6 kilograms $10 per kilogram)
$
60
Labor:
(8 hours $19 per hour)
$
152
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
1,000
units
Units completed during the month
6,750
units
Budgeted output
7,500
units
Purchases of materials, in kilograms (AQ)
33,000
Total actual labor costs incurred
$
526,000
Direct labor hours worked (AQ)
25,000
hours
Materials purchase-price variance
$
3,800
unfavorable
Increase in materials inventory in July
1,700
kilograms
Beginning inventory of materials
0
kg.
The direct labor efficiency variance for July, to the nearest dollar, was:
Multiple Choice
$616,600 unfavorable.
$687,800 favorable.
$615,800 unfavorable.
$615,200 favorable.
$623,000 favorable.
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