Ravena Labs $\bullet$ 3,750 Units of Compound Were Produced During the Month

question 116

Multiple Choice

Ravena Labs., Inc. makes a single product which has the following standards: Direct materials: 2.5 ounces at $20 per ounce
Direct labor: 1.4 hours at $12.50 per hour
Variable manufacturing overhead: 1.4 hours at 3.50 per hour
Variable manufacturing overhead is applied on the basis of standard direct labor-hours. The following data are available for October:
$\bullet$ 3,750 units of compound were produced during the month.
$\bullet$ There was no beginning direct materials inventory.
$\bullet$ Direct materials purchased: 12,000 ounces for $225,000.
$\bullet$ The ending direct materials inventory was 2,000 ounces.
$\bullet$ Direct labor-hours worked: 5,600 hours at a cost of $67,200.
$\bullet$ Variable manufacturing overhead costs incurred amounted to $18,200.
$\bullet$ Variable manufacturing overhead applied to products: $18,375.
The materials price variance for October is:

• A) $15,000 Unfavorable
• B) $15,000 Favorable
• C) $25,000 Unfavorable
• D) $25,000 Favorable

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