Question

Fluegge Inc. has provided the following data concerning one of the products in its standard cost system. Variable manufacturing overhead is applied to products on the basis of direct labor-hours.Inputs Standard Quantity or Hours per Unit of Output Standard Price or RateDirect materials 5.7 liters $5,40 per literDirect labor 0.70 hours $20.60 per hourVariable manufacturing overhead 0.70 hours $5.50 per hourThe company has reported the following actual results for the product for DecemberActual output 4,100 unitsRaw materials purchased 25,100 litersActual price of raw materials $4.80 per literActual cost of raw materials purchased $120,480 Raw materials used in production 23,360 litersActual direct labor-hours 2,700 hoursActual direct labor rate $21.20 per hourActual direct labor cost $57,240 Actual variable overhead rate $5.90 per hourActual variable overhead cost $15,930 What is the raw materials price variance for the month?

Answer 1

Answer:

$14,016 favorable

Explanation:

The computation of the raw materials price variance is shown below:

= Actual Quantity × (Standard Price - Actual Price)

= 23,360 liters × ($5.40 - $4.80)

= 23,360 liters × $0.6

= $14,016 favorable

We simply deduct the actual price from the standard price and then multiplied it by the actual quantity so that actual value can come