Question

gipple corporation makes a product that uses a material with the quantity standard of 8.9 grams per unit of output and the price standard of $7.60 per gram. in january the company produced 5,000 units using 26,470 grams of the direct material. during the month the company purchased 29,000 grams of the direct material at $7.70 per gram. the direct materials purchases variance is computed when the materials are purchased. The materials price variance for January is:

Answer 1

The materials price variance for Gipple Corporation in January is $2,900, which is unfavorable because the actual cost of materials exceeded the standard cost.

Step-by-step explanation:

The student is asking to calculate the materials price variance for January given the standard and actual prices and quantities for the materials purchased by Gipple Corporation in that month. To compute the materials price variance, we compare the standard cost of the actual quantity of materials purchased with the actual cost. Here's the calculation:

• Standard price per gram: $7.60
• Actual price per gram: $7.70
• Quantity purchased: 29,000 grams
• Standard cost of the actual quantity purchased: 29,000 grams x $7.60/gram = $220,400
• Actual cost of the quantity purchased: 29,000 grams x $7.70/gram = $223,300

To find the material price variance, subtract the standard cost from the actual cost:

Material Price Variance = Actual Cost - Standard Cost

Material Price Variance = $223,300 - $220,400 = $2,900

The materials price variance for January is $2,900 Unfavorable, since the actual cost is higher than the standard cost.