Galla Corporation Makes a Product with the Following Standard Costs

question 150

Multiple Choice

Galla Corporation makes a product with the following standard costs:


The company budgeted for production of 2,400 units in June, but actual production was 2,500 units. The company used 19,850 pounds of direct material and 980 direct labor-hours to produce this output. The company purchased 21,700 pounds of the direct material at $6.70 per pound. The actual direct labor rate was $19.20 per hour and the actual variable overhead rate was $1.80 per hour.

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 June is:

• A)$6,150 F
• B)$6,150 U
• C)$6,510 F
• D)$6,510 U

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Definitions:

Overhead Volume Variance

A metric used to measure the difference between the budgeted and actual volume of production, affecting the budgeted overhead costs.

Controllable Variance

The difference between actual and expected outcomes that can be directly managed or influenced by a responsible party.