Reference no: EM133183643

Question - Your company, Harris Halo Products, has won funding from Shark Tank. Your team manufactures one product. Its variable manufacturing overhead is applied to production based on direct labor-hours and the standards per unit are as follows:

Direct materials per unit: 15 pounds at $20 per pound

Direct labor per unit: 5 hours at $15 per hour

Variable overhead: 5 hours at $12 per hour

Budgeted Fixed advertising expenses: $8,500

Budgeted Fixed sales expenses: $21,000

Budgeted Fixed shipping expenses: $27,000

The planning budget for August 2022 was based on producing and selling 5,000 units. However, during August the company actually produced and sold 4,900 units, at a selling price of $475 per unit, and incurred the following costs:

1. Purchased 72,000 pounds of direct materials at a cost of $21 per pound. All of this material was used in production.

2. Direct laborers worked 26,000 hours at a rate of $16.00 per hour

3. Total variable manufacturing overhead for the month was $290,000

4. ACTUAL costs: Total fixed advertising expenses were $9,000. Total fixed sales expenses were $20,000. Total fixed shipping expenses were $26,000.

Required - What is the materials price variance for August? Favorable or Unfavorable?