If the actual price of direct materials purchased is $200 per unit while the standard price for direct materials is $180 per unit and the total direct material used is 1,000 units while the standard direct materials allowed for actual production is 1,200 units,
A)the direct materials quantity variance will be favorable
B)the direct materials quantity variance will be unfavorable
C)the direct materials price variance will be favorable
D)the direct materials price variance will be $0.

Question

Quizplus · Accepted Answer

The direct materials quantity variance is calculated as (Standard Quantity - Actual Quantity) x Standard Price. Since the actual quantity used (1,000 units) is less than the standard quantity allowed (1,200 units), the variance is favorable.

If the Actual Price of Direct Materials Purchased Is $200