Question

g Jackson Industries uses a standard cost system in which direct materials inventory is carried at standard cost. Jackson has established the following standards for one unit of product: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 4 pounds $4.70 per pound $18.80 Direct labor 2.60 hours $7.00 per hour $18.20 During May, Jackson purchased 107,250 pounds of direct material at a total cost of $525,525. The total factory wages for May were $419,300, 90 percent of which were for direct labor. Jackson manufactured 23,000 units of product during May using 88,600 pounds of direct material and 60,300 direct labor-hours. The price variance for the direct material acquired by Jackson Industries during May is:

Answer 1

Answer:

Direct material price variance= $21,450

Explanation:

Giving the following information:

Direct materials 4 pounds $4.70 per pound

May:

Jackson purchased 107,250 pounds of direct material at a total cost of $525,525.

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

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

Actual price= 525,525/107,250= $4.9

Direct material price variance= (4.7 - 4.9)*107,250

Direct material price variance= $21,450