Question

24. The following information is available for Geek Manufacturing Company. -- Direct materials price standard is $4.50 per pound. -- Direct materials quantity standard is seven pounds per finished unit. -- Budgeted production is 25,000 finished units. -- 200,000 pounds of direct materials were purchased for $925,000. -- 200,000 pounds of direct materials were used in production. -- 25,600 finished units of product were produced. What is the direct materials price variance

Answer 1

Material price variance = $25,000 Unfavorable

Step-by-step explanation:

A material price variance occurs where materials are purchased at a price either lower or higher than the standard price. A favorable variance is recorded where the actual total cost of materials is lower that the standard cost. While an adverse variance implies the opposite

$

200,000 pounds should have cost (200,000× $4.50)= 900,000

but did cost 925,000

Material price variance 25,000Unfavorable

Material price variance = $25,000 Unfavorable