Question

TB MC Qu. 08-93 A company has established... A company has established 5 pounds of Material J at $2 per pound as the standard for the material in its Product Z. The company has just produced 1,000 units of this product, using 5,200 pounds of Material J that cost $9,880.The direct materials price variance is: Multiple Choice $520 unfavorable. $400 unfavorable. $120 favorable. $520 favorable. $400 favorable.

Answer 1

Direct material price variance= $520 favorable

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= (2 - 1.9)*5,200

Direct material price variance= $520 favorable

Actual price= 9,880 / 5,200= $1.9