The Reindeer Company Makes Mugs for Which the Following Standards

question 31

Multiple Choice

The Reindeer Company makes mugs for which the following standards have been developed: $\begin{array}{cc}&\text { Standard Inputs } & \text { Standard Frice } \\&\text { Expected for Each } & \text { Expected per } \\&\text { Unit of Output } & \text { Unit of Output }\\\hline\text { Direct materials } & 5 \text { ounces } & \$ 2 \text { per ounce } \\\text { Direct labor } & 1.5 \text { hours } & \$ 8 \text { per hour }\end{array}$ Production of 400 mugs was expected in July, but 440 mugs were actually completed. Direct materials purchased and used were 2,100 ounces at an actual price of $2.30 per ounce.Direct-labor cost for the month was $5,310, and the actual pay per hour was $9.00._____ is the direct-material price variance for July.

• A)$630 unfavorable
• B)$630 favorable
• C)$400 unfavorable
• D)$400 favorable