Question

Century Manufacturing developed the following per-unit standards for its product: 4 pounds of direct materials at $6.40 per pound. Last month, 3,000 pounds of direct materials were purchased for $18,240. The direct materials price variance for last month was

Answer 1

Answer:

price variance   960.00 F

Explanation:

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

std cost                 $6.40

actual cost         $6.08 (18,240 total cost/ 3,000 units purchased)

quantity           3,000

$(6.40 - 6.08) \times 3,000 = DM \: price \: variance$

difference         $0.32

3,00 x 0.32 = price variance

price variance   $960.00

The actual cost was below the standard. It cost less to purchase each pound. This variance is favorable