Epley Corporation Makes a Product with the Following Standard Costs

question 358

Multiple Choice

Epley Corporation makes a product with the following standard costs: In July the company produced 3,300 units using 12,240 pounds of the direct material and 2,760 direct labor-hours.During the month,the company purchased 13,000 pounds of the direct material at a cost of $35,100.The actual direct labor cost was $51,612 and the actual variable overhead cost was $20,148. The company applies variable overhead on the basis of direct labor-hours.The direct materials purchases variance is computed when the materials are purchased.
The materials price variance for July is:

• A)$3,465 U
• B)$3,900 F
• C)$3,465 F
• D)$3,900 U

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Definitions:

Actual Manufacturing Overhead

The real expenses incurred during the manufacturing process, excluding direct labor and raw material costs, such as utilities, depreciation, and maintenance.

Incurred

Refers to costs or expenses that have been realized or consumed in the course of business operations.

Product Costs

The direct and indirect costs incurred to produce a product, including materials, labor, and overhead.

Work in Process Inventory

Goods partially completed but not yet ready for sale, representing a stage between raw materials and finished goods in the manufacturing process.