Question

The following data relate to direct materials costs for February: Materials cost per yard: standard, $2.00; actual, $2.10 Standard yards per unit: standard, 4.5 yards; actual, 4.75 yards Units of production: 9,500 Calculate the direct materials price variance.

a. $4,512.50 unfavorable
b. $378.00 unfavorable
c. $378.00 unfavorable
d. $1,795.50 unfavorable

Answer 1

A. 4512.5 Unfavorable

Step-by-step explanation:

Material Price Variance is the difference between the actual and budgeted cost to acquire materials, multiplied by the total number of units purchased. If the actual material cost is lower than the standard material cost, is is favorable and if the actual material cost is higher than the standard material cost, it is unfavorable.

Total number of actual material quantity purchased = $4.75 x 9500 = 45,125

Material price variance = (Standard price - Actual price) x actual quantity used

($2.00 - $2.10) x 45125 = $4512.5

Since actual material price is higher than the standard material price, this is an unfavorable material price variance.