Question

The following materials standards have been established for a particular product: Standard quantity per unit of output 5.3 meters Standard price $ 17.20 per meter The following data pertain to operations concerning the product for the last month: Actual materials purchased 8,100 meters Actual cost of materials purchased $ 141,345 Actual materials used in production 7,600 meters Actual output 1,400 units What is the materials price variance for the month

Answer 1

Answer:

Direct material price variance= $2,025 unfavorable.

Explanation:

Giving the following information:

Standard price $ 17.20 per meter

Actual materials purchased 8,100 meters

Actual cost of materials purchased $ 141,345

Actual materials used in production 7,600

First, we need to calculate the actual price per meter:

Actual price= 141,345/8,100= $17.45

Now, using the following formula, we can calculate the material price variance:

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

Direct material price variance= (17.20 - 17.45)*8,100= $2,025 unfavorable.

It is unfavorable because the actual price paid for meter is higher than estimated.