During June, 12,000 pounds of materials were purchased at a cost of $8 per pound.If there was an unfavorable direct materials price variance of $6,000 for June, the standard cost per pound must be
A) $8.50.
B) $8.00.
C) $7.50.
D) $7.00.

Question

Quizplus · Accepted Answer

Using the formula for direct materials price variance:

DM Price Variance = (Actual Price - Standard Price) x Actual Quantity

We know that the actual quantity purchased is 12,000 pounds and the actual price is $8 per pound. We also know that the direct materials price variance is unfavorable (meaning the actual price was higher than the expected/standard price) and is equal to $6,000.

Plugging these values into the formula, we get:

$6,000 = ($8 - Standard Price) x 12,000 pounds

Solving for the standard price, we get:

Standard Price = $8 - ($6,000 / 12,000 pounds) = $8 - $0.50 = $7.50

Therefore, the standard cost per pound must be $7.50.

During June, 12,000 Pounds of Materials Were Purchased at a Cost