Question

A company provides the following data for material costs: Standard cost per unit 3 pounds at $2 per unit Actual cost per unit 2.5 pounds at $3 per unit During the month, 5,000 pounds of raw materials were purchased. What is the direct material price variance?

Answer 1

Answer:

Direct material price variance= $5,000 unfavorable

Explanation:

Giving the following information:

Standard cost per unit 3 pounds at $2 per unit

Actual cost per unit 2.5 pounds at $3 per unit

During the month, 5,000 pounds of raw materials were purchased.

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

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

Direct material price variance= (2 - 3)*5,000

Direct material price variance= $5,000 unfavorable