A company provided the following direct materials cost information. Compute the

Question

A company provided the following direct materials cost information. Compute the direct materials price variance. Standard costs assigned: Direct materials standard cost (421,000 units @ $3.30/unit) $ 1,389,300 Actual costs: Direct Materials costs incurred (418,200 units @ $3.40/unit) $ 1,421,880 Multiple Choice $41,820 Unfavorable. $41,820 Favorable. $42,100 Favorable. $1,389,300 Unfavorable. $1,389,300 Favorable.

MC Qu. 47 A company provided the following... A company provided the following direct materials cost information. Compute the direct materials price variance. Standard costs assigned: Direct materials standard cost (421,000 units @ $3.30/unit) Actual costs: Direct Materials costs incurred (418,200 units $3.40/unit) $1,421,880 $1,389,300 Multiple Choice $41,820 Unfavorable. $41,820 Favorable $42,100 Favorable. $1,389,300 Unfavorable. $1,389,300 Favorable

Explanation / Answer

Calculation of direct material price variance:

Direct material price variance= ( Standard price- Actual price)*Actual quantity

                                         =(3.30-3.40)*418200= -$41820

Direct material price variance is $41820 Unfavourable

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