Question

The standard materials cost to produce 1 unit of Product R is 7 pounds of material at a standard price of $58 per pound. In manufacturing 8,500 units, 56,500 pounds of material were used at a cost of $59 per pound. What is the direct materials price variance?

A. $174,000 unfavorable.
B. $174,000 favorable
C. $56,500 favorable.
D. $117,500 favorable.
E. $56,500 unfavorable.

Answer 1

The direct materials price variance is calculated by multiplying the difference between actual and standard material price by the actual quantity used, resulting in a C. $56,500 unfavorable variance for Product R.

Step-by-step explanation:

The direct materials price variance is calculated by taking the difference between the actual cost of materials and the standard cost, and then multiplying by the actual quantity used. For Product R, the standard materials cost is 7 pounds at $58 per pound. The actual materials used were 56,500 pounds at $59 per pound. To compute the variance, we subtract the standard price ($58) from the actual price ($59) and then multiply by the actual quantity of materials used (56,500 pounds).

This gives us a variance of ($59 - $58) × 56,500 pounds = $1 × 56,500 pounds = $56,500.

Since the actual price is higher than the standard price, this is an unfavorable variance, indicating that the materials cost more than expected. Therefore, the price variance for direct materials is $56,500 unfavorable.