Heavy Products, Inc. developed standard costs for direct material and direct labor. In 2017, All estimated the following standard costs for one of their major products, the 10-gallon plastic container. Budgeted quantity. Budgeted price Direct materials 0.80 pounds $60 per pound Direct labor 0.10 hours $20 per hour During June, Heavy Products produced and sold 15,000 containers using 25,000 pounds of direct materials at an average cost per pound of $64 and 12,000 direct manufacturing labor- hours at an average wage of $21.56 per hour. June's direct material flexible-budget variance is A) $18,720 favorable B) $880,000 unfavorable C) $100,000 favorable D) $60,000 unfavorable

Heavy Products, Inc. developed standard costs for direct material and direct labor. In 2017, All estimated the following standard costs for one of their major products, the 10-gallon plastic container. Budgeted quantity. Budgeted price Direct materials 0.80 pounds $60 per pound Direct labor 0.10 hours $20 per hour During June, Heavy Products produced and sold 15,000 containers using 25,000 pounds of direct materials at an average cost per pound of $64 and 12,000 direct manufacturing labor- hours at an average wage of $21.56 per hour. June's direct material flexible-budget variance is A) $18,720 favorable B) $880,000 unfavorable C) $100,000 favorable D) $60,000 unfavorable

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Description: Heavy Products, Inc. developed standard costs for direct material and direct labor. In 2017, Allestimated the following standard costs for one of their major products, the 10-gallon plasticcontainer.Budgeted quantity. Budgeted priceDirect materials

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

Variance Analysis

In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.

Standard Costing

The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.

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Question

Heavy Products, Inc. developed standard costs for direct material and direct labor. In 2017, All
estimated the following standard costs for one of their major products, the 10-gallon plastic
container.
Budgeted quantity. Budgeted price
Direct materials 0.80 pounds $60 per pound
Direct labor 0.10 hours $20 per hour
During June, Heavy Products produced and sold 15,000 containers using 25,000 pounds of
direct materials at an average cost per pound of $64 and 12,000 direct manufacturing labor-
hours at an average wage of $21.56 per hour.
June's direct material flexible-budget variance is
A) $18,720 favorable
B) $880,000 unfavorable
C) $100,000 favorable
D) $60,000 unfavorable

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