Question - A company makes and sells custom-made puzzles. The company has set the following standard quantities and costs for materials and labor per unit for one of its specialty puzzles:
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Direct materials
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.25 lbs per unit at $8.00 per unit
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$2.00
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Direct labor
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.75 hours per unit at $10.00 per hour
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$7.50
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Total standard cost per unit
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$9.50
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During the month, the company budgeted to produce 500 puzzles but actually produced 450 puzzles. Total material costs were $980.
What is the direct materials variance in this situation?