Question

A company developed the following per unit standards for its products: 2.30 pounds of direct materials at $5.7 per pound. Last month, 2500 lbs of direct materials were purchased for $5900. The direct materials price variance for last month was

Answer 1

Answer: $5,010 Favorable

Explanation:

Direct materials price variance is calculated by the formula:

= (Standard Price - Actual Price) * Quantity Purchased

Actual price = Amount pounds were purchased for / Pounds purchased

= 5,900 / 2,500

= $2.36

Direct materials price variance = (5.7 - 2.36) * 2,500

= $5,010 Favorable