The standard costs and actual costs for direct materials for the manufacture of 3,000 actual units of product are as follows:Standard CostsDirect materials (per completed unit)1,040 kilograms at $8.75Actual CostsDirect materials2,000 kilograms at $8.00The direct materials price variance is
A) $2,750 unfavorable variance
B) $2,750 favorable variance
C) $1,500 favorable variance
D) $1,500 unfavorable variance

Question

The standard costs and actual costs for direct materials for the manufacture of 3,000 actual units of product are as follows:Standard CostsDirect materials (per completed unit)1,040 kilograms at $8.75Actual CostsDirect materials2,000 kilograms at $8.00​The direct materials price variance is
A) $2,750 unfavorable variance
B) $2,750 favorable variance
C) $1,500 favorable variance
D) $1,500 unfavorable variance

Quizplus · Accepted Answer

The direct materials price variance is calculated as (Actual Quantity x Actual Price) - (Actual Quantity x Standard Price). Here, it is (2,000 kg x $8.00) - (2,000 kg x $8.75) = $16,000 - $17,500 = $1,500 favorable.

The Standard Costs and Actual Costs for Direct Materials for the Manufacture