The question is in complete (the tutor added $8 as standard material price)
In January the company produced 4,400 units using 10,180 pounds of the direct material and 2,160 direct labor-hours. During the month, the company purchased 10,750 pounds of the direct material at a cost of $76,630. The actual direct labor cost was $38,250 and the actual variable overhead cost was $11,951. The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased. The materials price variance for January is:
Assuming a standard material price of $8 per pound
(Note this was added by the tutor)
Answer:
Price variance $9,370 Favorable
Step-by-step explanation:
Material price variance
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
$
10750 pounds should have cost (10,750 × $8) 86,000
but did cost (actual cost 76,630
Price variance 9,370 Favorable