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8 April, 04:24

A company developed the following per-unit standards for its product: 2 pounds of direct materials at $4 per pound. Last month, 1,500 pounds of direct materials were purchased for $5,700. The direct materials price variance for last month was

a. 5,700 Favorable

b. $300 Favorable

c. $150 Favorable

d. $300 unfavorable

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Answers (1)
  1. 8 April, 07:40
    0
    b. $300 Favorable

    Explanation:

    The computation of the material price variance is shown below:

    = Actual Quantity * (Standard Price - Actual Price)

    = 1,500 pounds * ($19.30 - $5,700 : 1,500 pounds)

    = 1,500 pounds * ($4 - $3.8)

    = 1,500 pounds * $0.2

    = $300 favorable

    We simply take the difference of the prices and then multiplied it by the actual quantity so that the correct amount can be calculated
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