Question: Carter Manufacturing uses standard costing and has established the following direct material and direct labor standards for each unit of the single product it produces: Cost Component Standard Requirement Direct materials 5 gallons at $9 per gallon Direct labor 1.5 hours at $18 per hour During August, the company produced 7,500 units and incurred the following costs: Cost Component Direct materials purchased Direct materials used Direct labor used Actual Usage and Cost 32,000 gallons at $9.30 per gallon 30,500 gallons 11,400 hours at $17.80 per hour The direct materials purchases variance is computed when the materials are purchased. Required: The materials price variance for August was:
Question: Carter Manufacturing uses standard costing and has established the following direct material and direct labor standards for each unit of the single product it produces: Cost Component Standard Requirement Direct materials 5 gallons at $9 per gallon Direct labor 1.5 hours at $18 per hour During August, the company produced 7,500 units and incurred the following costs: Cost Component Direct materials purchased Direct materials used Direct labor used Actual Usage and Cost 32,000 gallons at $9.30 per gallon 30,500 gallons 11,400 hours at $17.80 per hour The direct materials purchases variance is computed when the materials are purchased. Required: The materials price variance for August was:
Question: Carter Manufacturing uses standard costing and has established the following direct material and direct labor standards for each unit of the single product it produces: Cost Component Standard Requirement Direct materials 5 gallons at $9 per gallon Direct labor 1.5 hours at $18 per hour During August, the company produced 7,500 units and incurred the following costs: Cost Component Direct materials purchased Direct materials used Direct labor used Actual Usage and Cost 32,000 gallons at $9.30 per gallon 30,500 gallons 11,400 hours at $17.80 per hour The direct materials purchases variance is computed when the materials are purchased. Required: The materials price variance for August was:
Certer manufacturing uses standard costing and has established the following direct material and direct labor standards for each unit of the single product it produces:
Transcribed Image Text:Question:
Carter Manufacturing uses standard costing and has established the following direct
material and direct labor standards for each unit of the single product it produces:
Cost Component Standard Requirement
Direct materials 5 gallons at $9 per gallon
Direct labor
1.5 hours at $18 per hour
During August, the company produced 7,500 units and incurred the following costs:
Cost Component
Direct materials purchased
Direct materials used
Direct labor used
Actual Usage and Cost
32,000 gallons at $9.30 per gallon
30,500 gallons
11,400 hours at $17.80 per hour
The direct materials purchases variance is computed when the materials are
purchased.
Required:
The materials price variance for August was:
Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.
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