Answer:
1) Direct material price variance= -5,000 or $5,000 unfavorable
2) Direct material quantity variance= $5,000 unfavorable
3) Actual price= $0.5122
Explanation:
Giving the following information:
Units produced= 200,000
Units sold= 200,000
Direct material used= 410,000
Standard quantity= 2 units of raw material
Budgeted cost= $0.5 per raw material unit
Total Raw material variance= $10,000 unfavorable
First, we need to calculate the direct material quantity variance:
Direct material quantity variance= (standard quantity - actual quantity)*standard price
Direct material quantity variance= (400,000 - 410,000)*0.5
Direct material quantity variance= $5,000 unfavorable
Now, we can determine the direct material price variance:
Total direct material varaince= Direct material quantity variance + direct material price variance
10,000= -5,000 +
direct material price variance= -5,000 or $5,000 unfavorable
Finally, we can calculate the actual price per raw material unit:
Direct material price variance= (standard price - actual price)*actual quantity
-5,000= (0.5 - actual price)*410,000
-5,000= 205,000 - 410,000actual price
210,000/410,000= actual price
$0.5122=actual price
