Question

During June, the company purchased 160,000 pounds of direct material at a total cost of $1,056,000. The company manufactured 20,000 units of product during June using 120,800 pounds of direct materials. The price variance for the direct materials acquired by the company during June is: (Do not round intermediate calculations.)

Answer 1

Results are below.

Step-by-step explanation:

We were not provided with the standard cost per pound of direct material. I will assume a cost of $7 per pound.

To calculate the direct material price variance, we need to use the following formula:

Direct material price variance= (standard price - actual price)*actual quantity

Direct material price variance= (7 - 6.6)*160,000

Direct material price variance= $64,000 favorable

Actual price= 1,056,000 / 160,000= $6.6