In June, Indigo Manufacturing Purchased 6,000 Gallons of Blue Dye

question 115

Multiple Choice

In June, Indigo Manufacturing purchased 6,000 gallons of blue dye used to produce stone-washed denim clothing.The price per gallon was $1.24 and the company used 5,400 gallons of the dye during the month to produce 42,660 yards of dyed denim fabric.The standard allows for 8 yards of fabric per gallon of dye.The standard price for the dye is $1.26.What is the materials quantity variance for Indigo for June?

• A)$85.05 favorable
• B)$85.05 unfavorable
• C)$108 favorable
• D)$108 unfavorable

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Definitions:

Unit Product Cost

The total cost associated with producing one unit of a product, including direct materials, labor, and allocated overhead.

Unit Product Cost

The total cost to produce one unit of a product, comprising both direct costs like materials and labor, and allocated indirect costs.

Variable Costing

A bookkeeping procedure that adds only variable production fees (including direct materials, direct labor, and variable manufacturing overhead) into the costs associated with products.

Unit Product Cost

The total cost to produce a single unit of product, including direct materials, direct labor, and allocated overhead.