Problem
Tharaldson Corporation makes a product with the following standard costs:
|
Standard Quantity or Hours
|
Standard Price or Rate
|
Standard Cost Per Unit
|
|
Direct materials
|
|
7.6
|
ounces
|
$
|
4.00
|
per ounce
|
$
|
30.40
|
|
|
Direct labor
|
|
0.7
|
hours
|
$
|
10.00
|
per hour
|
$
|
7.00
|
|
|
Variable overhead
|
|
0.7
|
hours
|
$
|
9.00
|
per hour
|
$
|
6.30
|
|
The company reported the following results concerning this product in June.
|
Originally budgeted output
|
3,000
|
units
|
|
Actual output
|
2,600
|
units
|
|
Raw materials used in production
|
20,000
|
ounces
|
|
Purchases of raw materials
|
17,400
|
ounces
|
|
Actual direct labor-hours
|
3,500
|
hours
|
|
Actual cost of raw materials purchases
|
45,000
|
|
|
Actual direct labor cost
|
13,000
|
|
|
Actual variable overhead cost
|
3,500
|
|
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
What is the materials price variance for June?