Question

The standard costs and actual costs for direct materials for the manufacture of 3,000 actual units of product are as follows: Standard Costs Direct materials 1,040 kilograms at $8.75 Actual Costs Direct materials 2,000 kilograms at $8.00 The direct materials price variance is a.$2,750 favorable b.$2,750 unfavorable c.$1,500 unfavorable d.$1,500 favorable

Answer 1

Answer:

$2,250 favorable

Explanation:

The direct material price variance is computed as;

= ( Standard price - Actual price ) × Actual quantity

Given that;

Standard price = $8.75

Actual price = $8

Actual quantity = 3,000 units

Direct material price variance

= ( $8.75 - $8 ) × 3,000

= ( $0.75 ) × 3,000

= $2,250 favorable