Garland Company uses a standard cost system. The standard for each finished unit of product allows for 3 pounds of plastic at $0.72 per pound. During December, Garland bought 4300 pounds of plastic at $0.75 per pound, and used 4000 pounds in the production of 1300 finished units of product. What is the direct materials purchase price variance for the month of December

Question

Business

Enrique Mendoza

9 November, 16:30

Garland Company uses a standard cost system. The standard for each finished unit of product allows for 3 pounds of plastic at $0.72 per pound. During December, Garland bought 4300 pounds of plastic at $0.75 per pound, and used 4000 pounds in the production of 1300 finished units of product. What is the direct materials purchase price variance for the month of December

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Answers (1)

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Rayan Cabrera · Answer 1

Direct material price variance = $129 unfavorable

Explanation:

Giving the following information:

The standard for each finished unit of the product allows $0.72 per pound. During December, Garland bought 4300 pounds of plastic at $0.75 per pound.

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

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

Direct material price variance = (0.72 - 0.75) * 4,300

Direct material price variance = $129 unfavorable