Question

Fact Pattern: Blaster, Inc., a manufacturer of portable radios, purchases the components from subcontractors to use to assemble into a complete radio. Each radio requires three units each of Part XBEZ52, which has a standard cost of $1.45 per unit. During May, Blaster experienced the following with respect to Part XBEZ52: Units Purchases ($18,000) 12,000 Consumed in manufacturing 10,000 Radios manufactured 3,000 Question During May, Blaster incurred a purchase price variance of

Answer 1

Answer:

Direct material price variance= $600 unfavorable

Explanation:

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

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

Standard price= $1.45

Actual price= 18,000/12,000= $1.5

Actual quantity= 12,000

Direct material price variance= (1.45 - 1.5)*12,000

Direct material price variance= $600 unfavorable