Problem:
Dudley Industries developed the following standard costs for direct materials and direct labor for gadgets:
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Standard quantity
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Standard price
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Direct materials
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0.60 pounds
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$25 per pound
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Direct labor
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0.20 hours
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$18 per hour
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During October, Dudley produced and sold 8,000 gadgets using 5,000 pounds of direct materials at an average cost per pound of $22.50, and 1,560 direct labor hours at an average wage of $18.20 per hour. What is the direct material quantity variance for October and what are likely causes of this variance?
Additional Information:
This question is basically belongs to Finance as well as it discusses about calculation computation of direct material quantity variance and the cause of variance.