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The standards for product V28 call for 7.5 pounds of a raw material that costs $18.10 per pound. Last month, 1,400 pounds of the raw material were purchased for $24,990. The actual output of the month was 160 units of product V28. A total of 1,300 pounds of the raw material were used to produce this output.
Required:
a. What is the materials price variance for the month?
b. What is the materials quantity variance for the month?
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What would be the effect on the companys overall net operating income of dropping product N28X - Should the product be dropped?
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