108k views
4 votes
Denmark Corporation's variance report for the purchasing department reports 1,000 units of material A purchased and 2,400 units of material B purchased. It also reports standard prices of $2 for Material A and $3 for Material B. Actual prices reported are $2.10 for Material A and $2.80 for Material B. Denmark should report a total price variance of

1 Answer

1 vote

Answer:

Total material price variance= $380 favorable

Step-by-step explanation:

Giving the following information:

Material A:

Purchase= 1,000 units

Purchase price= $2.1

Standard price= $2

Material B:

Purchase= 2,400 units

Purchase price= $2.8

Standard price= $3

To calculate the total material price variance, we need to use the following formula on each material:

Direct material price variance= (standard price - actual price)*actual quantity

Material A:

Direct material price variance= (2 -2.1)*1,000

Direct material price variance= $100 unfavorable

Material B:

Direct material price variance= (3 - 2.8)*2,400

Direct material price variance= $480 favorable

Total material price variance= -100 + 480

Total material price variance= $380 favorable

User Rebca
by
8.6k points

No related questions found

Welcome to QAmmunity.org, where you can ask questions and receive answers from other members of our community.

9.4m questions

12.2m answers

Categories