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saveliy_v [14]
3 years ago
7

A company developed the following per-unit standards for its product: 2 gallons of direct materials at $8 per gallon. Last month

, 2200 gallons of direct materials were purchased for $16720. The direct materials price variance for last month was
Business
1 answer:
Radda [10]3 years ago
4 0

Answer:

$880 favorable

Explanation:

The computation of direct materials price variance for last month is shown below:-

Direct material price variance = Actual quantity × (Standard price - Actual price)

= 2,200 × ($8 - ($16,720 ÷ 2,200)

= 2,200 × ($8 - 7.6)

= 2,200 × $0.4

= $880 Favorable

Therefore for computing the direct materials price variance for last month we simply applied the above formula.

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