Question

Mitchell products manufacturers faux boulders to be used in various landscaping applications. A special resin is used to make the boulders. The standard quantity of resin used for each boulder is 2 pounds. Mitchell Products uses a standard cost of $1.80 per pound for the resin. The company produced 11,000 boulders in June. In that month, 21,750 pounds of resin were purchased at a total cost of $43,500.

Calculate the direct material price variance.

Answer 1

Direct material price variance= $4,350 unfavorable

Step-by-step explanation:

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= (1.8 - 2)*21,750

Direct material price variance= $4,350 unfavorable

Actual price= 43,500 / 21,750= $2