Question

Tharaldson Corporation makes a product with the following standard costs: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 7.6 ounces $ 4.00 per ounce $ 30.40 Direct labor 0.7 hours $ 10.00 per hour $ 7.00 Variable overhead 0.7 hours $ 9.00 per hour $ 6.30 The company reported the following results concerning this product in June. Originally budgeted output 3,000 units Actual output 2,600 units Raw materials used in production 16,300 ounces Purchases of raw materials 17,400 ounces Actual direct labor-hours 3,500 hours Actual cost of raw materials purchases $ 45,000 Actual direct labor cost $ 13,000 Actual variable overhead cost $ 3,500 The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The materials price variance for June is:

Answer 1

Answer:

Direct material price variance= $24,603.6 favorable

Explanation:

Giving the following information:

Direct materials 7.6 ounces $4.00 per ounce

Purchases of raw materials 17,400 ounces

Actual cost of raw materials purchases $45,000

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= (4 - 2.586)*17,400

Direct material price variance= $24,603.6 favorable

Actual price= 45,000/17,400= $2.586