The following information is for Parma Corporation: $\begin{array}{ll}&\text { Direct Material }\
\text { Standard price } p \text { er unit of input } & \$ 29 \
\text { Actual price per unit of input } & \$ 27 \
\text { Stand ard inputs allowed per unit of output } & 3 \text { pounds } \
\text { Actual units of input } & 9,300 \text { pounds } \
\text { Actual units of output } & 2,770 \text { units }
\end{array}$ * Direct material is measured in pounds is the direct- material price variance.
A) $18,600 favorable
B) $5,540 favorable
C) $18,600 unfavorable
D) $5,540 unfavorable

Question

Quizplus · Accepted Answer

The direct-material price variance is calculated as (Actual Price - Standard Price) x Actual Quantity. Here, it is ($27 - $29) x 9,300 = -$18,600, which is favorable because the actual price is less than the standard price.

The Following Information Is for Parma Corporation * Direct Material Is Measured in Pounds Is the Direct-