Question

The standard materials cost to produce 1 unit of Product R is 5 pounds of material at a standard price of $41 per pound. In manufacturing 7,000 units, 34,000 pounds of material were used at a cost of $42 per pound. What is the total direct materials cost variance?
a. $40,000 unfavorable.
b. $8,000 unfavorable.
c. $48,000 favorable.
d. $48,000 unfavorable.
e. $8,000 favorable.

Answer 1

Answer:

Total variance= $7,000 favorable

Explanation:

To calculate the direct material total variance, we need to determine the direct material price and quantity variance:

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

Direct material price variance= (41 - 42)*34,000

Direct material price variance= $34,000 unfavorable

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

Direct material quantity variance= (5*7,000 - 34,000)*41

Direct material quantity variance= $41,000 favorable

Total variance= 41,000 - 34,000= $7,000 favorable