Standard quantity or hours standard price or rate

Standard quantity or
hours
Standard price or
rate
Standard
cost
Direct
materials
3.5 feet $6.00 per foot $21.00
Direct labor 0.4 hours $10 per hour $ 4.00
During April, the following activity was recorded regarding the new product:

Purchased 7,000 feet of material at a cost of $5.75 per foot.

Used 6,000 feet of material to product 1,500 units of the new product.

Worked 725 direct labor hours on the new product at a cost of $8,120.
3.
(Ch 7) The direct material price variance for April is:
a.
$1,750 unfavorable
b.
$1,750 favorable
c.
$1,500 unfavorable
d.
$1,500 favorable
The correct answer is B. See the solution below for more details regarding the calculation.
4.
(Ch 7) The direct material quantity variance for April is:
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6,000 feet × $6.00 per foot
= $36,000

Quantity Variance, $4,500 U = SP * (AQ – SQA)
*1,500 units × 3.5 feet per unit = 5,250 feet
5.
(Ch 7) The direct labor rate variance for April is:
6.
(Ch 7) The direct labor efficiency variance for April is:
7.
(Ch 7) Does it appear that Blunck Co. is buying lower quality goods that might increase waste?
Page 4 of 15

a)
No, but it looks like they should try reducing costs somehow.
b)
No, and it doesn’t look like they need to bother with this.
c)
Yes, but the tradeoff is not worth it.
d)
Yes and the tradeoff is worth it.
The correct answer is C. Since the total direct material variance is $2,750 unfavorable, this does not
appear to be a good tradeoff.