Answer:
Results are below.
Explanation:
Giving the following information:
Direct materials: 5 pounds at $8.00 per pound $40.00
The planning budget for March was based on producing and selling 25,000 units.
<u>a)</u>
<u>The material cost included in the planning budget is the standard cost multiplied for the budgeted production.</u>
<u></u>
Direct material requiered= 25,000*5= 100,000 pounds
Standard cost per pound= $5
Direct material budget= 100,000*5= $500,000
b)
<u>The raw material's flexible budget adapts to the actual production level.</u>
Direct material flexible budget= standard cost*actual material used in production
Direct material flexible budget= 5*160,000
Direct material flexible budget= $800,000
<u>c)</u>
<u>To calculate the direct material price variance, we need to use the following formula:</u>
Direct material price variance= (standard price - actual price)*actual quantity
Direct material price variance= (5 - 7.5)*160,000
Direct material price variance= $400,000 unfavorable
