The standard costs and actual costs for direct materials for the manufacture of 2,500 actual units of product are as follows: $\begin{array}{ll}
\text { StandardCosts } \
1.04 \text { kilograms } @ \$ 8.75 & \text { Direct materials (per completed unit) } \
\
\text { Actual Costs } \
2,500 \text { kilograms } @ \$ 8 & \text { Direct materials }
\end{array}$
The amount of direct materials price variance is:
A) $1,875 unfavorable.
B) $1,950 favorable.
C) $1,875 favorable.
D) $1,950 unfavorable.

Question

The standard costs and actual costs for direct materials for the manufacture of 2,500 actual units of product are as follows: $\begin{array}{ll}
\text { StandardCosts } \
1.04 \text { kilograms } @ \$ 8.75 & \text { Direct materials (per completed unit) } \
\
\text { Actual Costs } \
2,500 \text { kilograms } @ \$ 8 & \text { Direct materials }
\end{array}$
 The amount of direct materials price variance is:
A) $1,875 unfavorable.
B) $1,950 favorable.
C) $1,875 favorable.
D) $1,950 unfavorable.

Quizplus · Accepted Answer

The direct materials price variance is calculated as (Actual Price - Standard Price) x Actual Quantity. Here, it is ($8 - $8.75) x 2,500 kg = -$1,875, which is favorable because the actual price is less than the standard price.

The Standard Costs and Actual Costs for Direct Materials for the Manufacture