Final answer:
The direct materials price variance measures the difference between the actual cost of materials and the standard cost anticipated by the company. However, the actual and standard costs must be known to compute this variance. Once provided with these figures, the calculation can be performed by multiplying the quantity by the difference in actual and standard prices.
Step-by-step explanation:
To compute the direct materials price variance, you need to have information on the standard cost of materials and the actual cost incurred for materials. Unfortunately, without such details, it is not possible to provide an answer to your question. In general, the direct materials price variance can be calculated using the formula:
Variance = (Actual Quantity × Actual Price) - (Actual Quantity × Standard Price)
The formula helps in assessing whether the company spent more or less on materials than it had anticipated. A favorable variance means the materials cost less than expected, and an unfavorable variance means they cost more.
If you can provide the actual and standard costs, I can assist you in calculating the variance. To illustrate this with an example: If the standard price per unit was $5 and the actual price paid was $6 for a quantity of 1000 units, the variance would be calculated as follows:
Variance = (1000 units × $6) - (1000 units × $5) = $6,000 - $5,000 = $1,000 unfavorable variance
This variance indicates that the firm spent $1,000 more on materials than initially planned.