E9-3 Interpreting Direct Materials Price, Quantity Variances [LO 9-3] Perfect Pe

Question

E9-3 Interpreting Direct Materials Price, Quantity Variances [LO 9-3]

Perfect Pet Collar Company makes custom leather pet collars. The company expects each collar to require 1.60 feet of leather and predicts leather will cost $2.70 per foot. Suppose Perfect Pet made 50 collars during February. For these 50 collars, the company actually averaged 1.95 feet of leather per collar and paid $2.20 per foot.

Required:
1. Calculate the standard direct materials cost per unit. (Round your answer to 2 decimal places.)

2. Without performing any calculations, determine whether the direct materials price variance will be favorable or unfavorable.

Explanation / Answer

1 Standard Direct Materials = 1.60*2.70= $4.32 per Collar 2 Direct Material Price Variance will be favorable as actual rate per foot is less than standard rate per foot

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