Question 42
The following information applies to Baker Engineering Company for the last quarter.
The company produced 42,000 units of product and direct labor hours were 250,000.
Units produced were assigned the following standard costs:
Direct materials (1,025,000 lbs @ $5 per lb)
Direct labor (255,000 hrs @ $9 per hr)
$5,125,000
$2,295,000
Actual costs incurred during the quarter were:
Direct materials (1,000,000 lbs @ $5.25 per lb)
$5,250,000
Direct labor (250,000 hrs @ $8.75 per hr)
$2,187,500
The direct materials quantity variance is
$45,000 Favorable
$250,000 Favorable
$125,000 Unfavorable
$125,000 Favorable
$250,000 Unfavorable