Question

MC Qu. 93 A company has established... A company has established 5 pounds of Material J at $3 per pound as the standard for the material in its Product Z. The company has just produced 1,500 units of this product, using 7,700 pounds of Material J that cost $21,780.The direct materials price variance is:

Answer 1

The direct materials price variance is $144,600.

Step-by-step explanation:

The direct materials price variance can be calculated using the formula:

Direct materials price variance = (Actual quantity of materials used x Actual price) - (Standard quantity of materials allowed x Standard price)

In this case, the actual quantity of material used is 7,700 pounds, and the actual price is $21,780. The standard quantity of material allowed is 1,500 units x 5 pounds per unit = 7,500 pounds, and the standard price is $3 per pound.

Using these values, we calculate the direct materials price variance as follows:

Direct materials price variance = (7,700 pounds x $21,780) - (7,500 pounds x $3) = $167,100 - $22,500 = $144,600