Question

The following company information is available for March. The direct materials price variance is: Direct materials purchased and used Standard costs for direct materials for March production 3, 600 feet $80 3,700 feet $78 Multiple Choice $600 favorable. a. $7,400 unfavorable. b. $7,400 favorablec. $7.200 favorable. d. $7,200 unfavorable.

Answer 1

Answer:

Option (d) $7,200 unfavorable.

Explanation:

Data provided in the question:

Standard price = $78

Actual price = $80

Standard quantity = 3,700

Actual quantity = 3,600

Now,

The direct material price variance

= ( Standard price - Actual price ) × actual quantity

= ( $78 - $80 ) × 3,600

or

= - 7,200       [ negative sign depicts unfavorable ]

Hence,

Option (d) $7,200 unfavorable.