SeaKist Marine Stores Company manufactures decorative fittings for luxury yachts, which require highly skilled labor, and special metallic materials
SeaKist uses standard costs to prepare its flexible budget. For the first quarter of 2016, direct materials and direct labor standards for one of their popular products were as follows:
Direct materials: 1.5 pounds per unit; $4 per pound
Labor: 2 hours per unit; $18 per hour
During the first quarter, SeaKist produced 5,000 units of this product. At the end of the quarter, an examination of the direct materials records revealed that the company used 7,000 pounds of direct materials. The direct materials efficiency variance was $2,000 F. Which of the following is a logical explanation for this variance?
A) The company used fewer labor hours than allowed by the standards.
B) The company paid a lower cost per hour for labor than allowed by the standards.
C) The company used a lower quantity of direct materials than was allowed by the standards.
D) The company paid a lower cost for the direct materials than allowed by the standards.
C
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