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Ravena Labs., Inc. makes a single product which has the following standards:
Direct materials: 2.5 ounces at $20 per ounce
Direct labor: 1.4 hours at $12.50 per hour
Variable manufacturing overhead: 1.4 hours at 3.50 per hour
Variable manufacturing overhead is applied on the basis of standard direct labor-hours. The following data are available for October:
3,750 units of compound were produced during the month.
There was no beginning direct materials inventory.
Direct materials purchased: 12,000 ounces for $225,000.
The ending direct materials inventory was 2,000 ounces.
Direct labor-hours worked: 5,600 hours at a cost of $67,200.
Variable manufacturing overhead costs incurred amounted to $18,200.
Variable manufacturing overhead applied to products: $18,375.
The materials price variance for October is:
Multiple Choice
$15,000 Unfavorable
$15,000 Favorable
$25,000 Unfavorable
$25,000 Favorable
Answer & Explanation
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