Question

Luma Inc. has provided the following data concerning one of the products in its standard cost system.Col1 Inputs Direct materialsCol2 Standard Quantity or Hours per Unit of Output 4.8 ouncesCol3 Standard Price or Rate $6.90 per ounceThe company has reported the following actual results for the product for September:
Actual output 2,100units
Raw materials purchased 10,500 ounces
Actual price of raw materials $7.80 per ounce
Actual cost of raw materials purchased $81,900
Raw materials used in production 10,090 ouncesThe raw materials price variance for the month is closest to:

A) $9,081 U
B) $9,450 F
C) $9,450 U
D) $9,081 F

Answer 1

Answer:

The correct answer is A.

Explanation:

Giving the following information:

Standard cost= 6.90 per ounce

Standard quantity= 4.8 ounces per unit

Actual output 2,100units

Actual price of raw materials $7.80 per ounce

Actual cost of raw materials purchased $81,900

Raw materials used in production 10,090 ounces.

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

Direct material price variance= (6.9 - 7.8)*10,090= $9,081 unfavorable