Question

Milar Corporation makes a product with the following standard costs:

Answer 1

Answer:

Direct material price variance= $1,690 favorable

Explanation:

Giving the following information:

Direct materials 7.7 pounds $ 4 per pound

During the month, the company purchased 16,900 pounds of the direct material at a cost of $65,910.

To calculate the direct material price variance, we need to use the following formula:

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

actual price= 65,910/16,900= $3.9

Direct material price variance= (4 - 3.9)*16,900

Direct material price variance= $1,690 favorable