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QUESTION - Harmon Household Products, Inc., manufactures a number of consumer items for general household use. One of these products, a chopping board, requires an expensive hardwood. During a recent month, the company manufactured 3,500 chopping boards using 2,310 board feet of hardwood. The hardwood cost the company $17,556.
The company's standards for one chopping board are 0.58 board feet of hardwood, at a cost of $8.00 per board foot.
Required:
1a. According to the standards, what cost for wood should have been incurred to make 3,500 chopping blocks?
1b. 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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