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7 March, 21:19

Milar Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Direct materials 2.0 pounds $ 7.00 per pound Direct labor 1.5 hours $ 15.00 per hour Variable overhead 1.5 hours $ 3.00 per hour In January the company produced 4,500 units using 10,210 pounds of the direct material and 2,190 direct labor-hours. During the month, the company purchased 10,780 pounds of the direct material at a cost of $76,660. The actual direct labor cost was $38,247 and the actual variable overhead cost was $11,948. 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 price variance for January is:

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  1. 7 March, 21:26
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    The materials price variance for January is $1154.731 unfavorable

    Explanation:

    The computation of the material price variance is shown below:

    = Actual Quantity * (Standard Price - Actual Price)

    = 10,210 * ($7.00 - $76,660 : 10,780)

    = 10,210 * ($7.00 - $7.11131)

    = 10,210 * 0.1131

    = $1154.731 unfavorable

    All other information which is given in the question is irrelevant. So, we do not consider in the computation part.
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