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Assume the following: The standard price per pound is $2.00. The standard quantity of pounds allowed per unit of finished goods is 4 pounds. The actual quantity of materials purchased and used in production is 50,800 pounds. The actual purchase price per pound of materials was $2.20. The company produced 13,000 units of finished goods during the period. What is the materials price variance

Sagot :

Kolawole845

Answer:

Direct material price variance =$10,160 unfavorable

Explanation:

Direct material price variance occurs when the actual quantity of materials are purchased at an actual price per unit higher or lower than the standard price.

Direct material price variance                                            $

50,800 pounds should have cost (50,800× $2)      =   101,600

but did cost                                      (50,800× $2.20) = 111,760

Direct material price variance                                         10,160  unfavorable

Direct material price variance =$10,160 unfavorable

Tundexi

The materials price variance is $10,160 Unfavorable.

The difference between the standard cost and actual cost for the purchased actual quantity of material is the direct material price variance

  • The formulae for the direct Materials price variance is (Standard price – Actual price) * Actual quantity purchased

Direct Materials price variance = ($2.00 per pound – $2.20per pound) * 50800 pounds

Direct Materials price variance = ($0.20 * 50,800 pounds) Unfavorable

Direct Materials price variance = $10,160 Unfavorable

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