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(solution) Use the information below to answer the followingquestion(s).


Use the information below to answer the followingquestion(s).

Tractor Corporation produces toy tractors. The company uses the following direct costcategories:

Category Standard Inputs for 1 output Std. Cost per input
Direct Materials 4.00 $12.50
Direct Labour 1.40 9.50
Direct Marketing 0.54 5.50

Actual performance and budgeted performance for the company is shownbelow:

Actualoutput: (inunits) 5,000

DirectMaterials:

Materials costs $299,000
Input purchased and used 23,000
Actual price per input $13.00


Direct ManufacturingLabour:

Labour costs $95,000
Labourminus?hours of input 9,500
Actual price per hour $10.00

Direct MarketingLabour:

Labour costs $40,000
Labourminus?hours of input 5,000
Actual price per hour $8.00


What is the price variance of the direct materials?



A. $10,000 unfavourable
B. $11,500 unfavourable
C. $11,000 favourable
D. $11,500 favourable
E. $10,000 favourable




 


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