Holly Industries manufactures artificial holiday wreaths.Its most popular wreath requires 3 yards of artificial pine boughs and 15 sprigs of holly berries.In August, the company purchased 4,000 yards of artificial pine bough, and 20,000 sprigs of holly berries.Holly paid $2.65 per yard for the artificial pine bough and purchased 4 boxes of holly berries for $7,000 per box, each box containing 5,000 sprigs.The standard price for artificial pine bough is $2.60 per yard, and the standard price per sprig of holly berry is $1.45.During August, Holly produced 1,250 wreaths and used 3,625 yards of artificial pine bough and 19,000 sprigs of holly berries.What is Holly's direct materials price variance for sprigs of holly berries for August?
A)$1,000 unfavorable
B)$1,000 favorable
C)$362.50 favorable
D)$362.50 unfavorable

Question

Quizplus · Accepted Answer

The actual cost per sprig is $7,000/5,000 = $1.40. The standard cost is $1.45. The variance is ($1.45 - $1.40) * 19,000 = $950 favorable, which rounds to $1,000 favorable.

Holly Industries Manufactures Artificial Holiday Wreaths