Question

The standard costs and actual costs for direct materials for the manufacture of 3,000 actual units of product are S

tandard Costs: Direct materials (per completed unit) 1,040 kilograms @$8.86
Actual Costs: Direct materials 3,000 kilograms @ $8.40 Round your final answer to the nearest dollar.
The amount of direct materials price variance is: a. $478 favorable b. $1,380 unfavorable c. $1,380 favorable d. $478 unfavorable

Answer 1

c. $1,380 Favorable

Step-by-step explanation:

Direct Material Price Variance = (Standard Price - Actual Price)
`*` Actual Quantity

We have Standard Price = $8.86

Actual Price = $8.40

Actual Quantity = 3,000 kilograms

Putting these values in above formula = ($8.86 - $8.40)
`*` 3,000

= $1,380 favorable

As the actual price is less than standard price, thus,

Correct option is

c. $1,380 Favorable