Question

Select the correct statement from the following,assuming Carmichael Company had a favorable direct materials price variance of $3,000 and an unfavorable direct materials usage variance of $2,000.

A) The total direct materials variance is $1,000 unfavorable.
B) The total direct materials variance is $5,000 favorable.
C) The total direct materials variance is $5,000 unfavorable.
D) The total direct materials variance is $1,000 favorable.

Answer 1

Total direct material variance= $1,000 favorable

Step-by-step explanation:

Giving the following information:

Company had a favorable direct materials price variance of $3,000 and an unfavorable direct materials usage variance of $2,000.

To calculate the total direct material variance, we need to use the following formula:

Total direct material variance= price variance +/- quantity variance

Total direct material variance= 3,000 - 2,000

Total direct material variance= $1,000 favorable