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horsena [70]
3 years ago
15

Baskets Inc. gathered the following actual results for the current month: Actual amounts: ​ Units produced 6000​ Direct material

s purchased and used (7600 lbs.) $68,400​Budgeted production and standard costs were: Budgeted production 5500 units Direct materials 3.5 lbs/unit at $6/lb.What is the direct materials price variance?
Business
1 answer:
ss7ja [257]3 years ago
8 0

Answer:

price variance  $(22,800.00) UNFAVORABLE

Explanation:

(standard\:cost-actual\:cost) \times actual \: quantity= DM \: price \: variance

std cost                           $6.00

actual cost                    $9.00

quantity                       7,600

difference                   $(3.00)

price variance  $(22,800.00)

We calculate the actual cost by dividing total cost by the lbs purchased:

68,400/7,600 = 9

Because the diference is negative, the variance is unfavorable.

Each pound cost more than it was planned.

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