Answer:
The correct answer for Price variance is $37,500( unfavorable) and for Usage variance is $19,200 ( Favorable).
Explanation:
According to the scenario, the given data are as follows:
Actual quantity = 1,875,000 ounces
Standard rate = $0.08 per ounce
Actual rate = $0.10 per ounce
Standard quantity = 4,50,000 × 4.7 = 2,115,000 ounces
So, Direct material price variance = Actual quantity × ( Standard rate - Actual rate )
= 1,875,000 × ( 0.08 - 0.10 )
= - $37,500 ( Negative shows Unfavorable)
and Direct material usage variance = standard rate per unit × (standard quantity - actual quantity)
= $0.08 ( 2,115,000 - 1,875,000)
= 19,200 ( Positive shows Favorable)
