Question

Gipple Corporation makes a product that uses a material with the quantity standard of 7.8 grams per unit of output and the price standard of $6.50 per gram. In January the company produced 3,900 units using 25,370 grams of the direct material. During the month the company purchased 27,900 grams of the direct material at $6.70 per gram. The direct materials purchases variance is computed when the materials are purchased. The materials price variance for January is:

Answer 1

Direct material price variance= $5,580 unfavorable

Step-by-step explanation:

Giving the following information:

The standard price of $6.50 per gram.

During the month the company purchased 27,900 grams of the direct material at $6.70 per gram.

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= (6.5 - 6.7)*27,900

Direct material price variance= $5,580 unfavorable