Question: Gumchara Corporation reported the following information with respect to the materials required to manufacture amalgam florostats during the current month:
Standard price per gram of materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4
Standard quantity of materials per amalgam florostat . . . . . . . . . . . . . . . . . . . . . 5 grams
Actual materials purchased and used in production . . . . . . . . . . . . . . . . . . . . . . . 6,000 grams
Actual amalgam florostats produced during the month . . . . . . . . . . . . . . . . . . . . 1,000 units
Actual cost of materials purchased . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $18,000
Normal monthly output . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900 units
a. Determine Gumchara's materials price variance.
b. Determine Gumchara's materials quantity variance.
c. Will Gumchara's overhead volume variance be favorable or unfavorable? Why?