22. Jackson Industries uses a standard cost system in which direct materials inv

Question

22. Jackson Industries uses a standard cost system in which direct materials inventory is carried at standard cost. Jackson has established the following standards for one unit of product:

During May, Jackson purchased 155,900 pounds of direct material at a total cost of $919,810. The total factory wages for May were $1,037,300, 90 percent of which were for direct labor. Jackson manufactured 28,000 units of product during May using 136,100 pounds of direct material and 87,300 direct labor-hours.

The price variance for the direct material acquired by Jackson Industries during May is:

A. $27,780 Favorable

B. $31,180 Unfavorable

C. $34,180 Favorable

D. $27,780 Unfavorable

Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 5 pounds $5.70 per pound $28.50 Direct labor 3.10 hours $12.00 per hour $37.20

Explanation / Answer

Price variance for the direct material acquired = 919810-(155900*5.7)= 31180 Unfavorable Option B is correct

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