Question

The following data are given for Stringer Company: Budgeted production 929 units Actual production 1,031 units Materials: Standard price per ounce $1.80 Standard ounces per completed unit 11 Actual ounces purchased and used in production 11,681 Actual price paid for materials $23,946 Labor: Standard hourly labor rate $14.47 per hour Standard hours allowed per completed unit 4.1 Actual labor hours worked 5,309.65 Actual total labor costs $80,972 Overhead: Actual and budgeted fixed overhead $1,040,000 Standard variable overhead rate $27.00 per standard labor hour Actual variable overhead costs $148,670 Overhead is applied on standard labor hours. Round your intermediate calculations and final answer to the nearest cent. The direct materials price variance is a.$2,920.25 favorable b.$7,300.62 unfavorable c.$7,300.62 favorable d.$2,920.25 unfavorable

Answer 1

d.$2,920.25 unfavorable

Step-by-step explanation:

Actual purchase price = Actual price paid for material / Actual ounces purchased and used in production

Actual purchase price = $23,946 / 11,681

Actual purchase price = $2.05

Direct materials price variance = Actual ounces purchased and used in production * (Actual purchase price - Standard price per ounce

Direct materials price variance = 11,681 * ($2.05 - $1.80)

Direct materials price variance = 11,681 * $0.25

Direct materials price variance = $2,920.25 Unfavorable