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Harmon Household Products. Inc. manufactures a number of consumer items for general household use. One of these products, a chopping board, requires expensive hardwood. During a recent month, the company manufactured 4,000 chopping boards using 11,000 board feet of hardwood. The hardwood cost the company $18,700.
The company's standards for one chopping board are 2.5 board feet of hardwood at a cost of $1.80 per board foot.
1. What cost for wood should been incurred to make 4,000 chopping blocks? How much greater or less is this than the cost that was incurred?
2. Break down the difference computed in (1) above into a materials price variance and a materials quantity variance.
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