The Reindeer Company makes mugs for which the following standards have been developed: Production of 400 mugs was expected in July,but 440 mugs were actually completed.Direct materials purchased and used were 2,100 ounces at an actual price of $2.30 per ounce.Direct labor cost for the month was $5,310,and the actual pay per hour was $9.00.What is the direct material price variance for July?
A)$400 Favorable
B)$400 Unfavorable
C)$630 Favorable
D)$630 Unfavorable

Question

The Reindeer Company makes mugs for which the following standards have been developed:  Production of 400 mugs was expected in July,but 440 mugs were actually completed.Direct materials purchased and used were 2,100 ounces at an actual price of $2.30 per ounce.Direct labor cost for the month was $5,310,and the actual pay per hour was $9.00.What is the direct material price variance for July?
A)$400 Favorable 
B)$400 Unfavorable 
C)$630 Favorable 
D)$630 Unfavorable

Quizplus · Accepted Answer

Direct material price variance = (Standard price - Actual price) x Actual quantity purchased
Standard price = $2.25 per ounce (given)
Actual price = $2.30 per ounce (given)
Actual quantity purchased = 2,100 ounces (given)
Direct material price variance = ($2.25 - $2.30) x 2,100 = $630 unfavorable

The Reindeer Company Makes Mugs for Which the Following Standards