Answer:
Direct material price variance = $ 10,600 favourable
Explanation:
The Direct material quantity variance($) = Direct material qty variance × standard price
Standard price = Direct material quantity variance ($)/Direct material quantity variance in units
Direct material quantity variance in units= 86,000 - 81,400 = 4,600
Standard price = $12,880/4,600 units = $2.8
<em>Direct material price variance occurs when the actual quantity of materials are purchased at an actual price per unit higher or lower than the standard price.</em>
Direct material price variance $
86,000 gallons should have cost (86,000× $2.8) = 240,800
But did cost <u>230,200</u>
Direct material price variance <u>10,600 </u>favourable
Direct material price variance = $ 10,600 favourable