Question

A company uses the following standard costs to produce a single unit of output. Direct materials 7 pounds at $0.60 per pound = $ 4.20 Direct labor 0.2 hour at $8.00 per hour = $ 1.60 Manufacturing overhead 0.2 hour at $3.90 per hour = $ 0.78 During the latest month, the company purchased and used 67,000 pounds of direct materials at a price of $.90 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $12,900 based on 1,720 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $3,800 and fixed manufacturing overhead incurred was $19,000. Based on this information, the total direct materials cost variance for the month was _______?

Answer 1

Answer:

Direct material price variance= $20,100 unfavorable.

Explanation:

Giving the following information:

Direct materials 7 pounds at $0.60 per pound = $ 4.20

During the latest month, the company purchased and used 67,000 pounds of direct materials for $.90 per pound to produce 10,000 units of output.

Direct material price variance= (standard price - actual price)*actual quantity

Direct material price variance= (0.60 - 0.90)*67,000= $20,100 unfavorable.