Cultco Company Ltd has set the following direct material standards per unit of product: 2.5 kg @ $3.00 per kg; $7.50 per unit. During April, actual direct material purchased and used amounted to 8000 kg at a cost of $3.10 per kg. Actual production amounted to 3000 units. Determine Cultco's direct material price variance.
A) $1500 (U)
B) $800 (U)
C) $750 (U)
D) $500 (U)

Question

Quizplus · Accepted Answer

Direct Material Price Variance = (Actual Price - Standard Price) x Actual Quantity

Actual Price = $3.10 per kg
Standard Price = $3.00 per kg
Actual Quantity = 8000 kg

Direct Material Price Variance = ($3.10 - $3.00) x 8000 kg
Direct Material Price Variance = $0.10 x 8000 kg
Direct Material Price Variance = $800 (U)

Therefore, the answer is B) $800 (U).

Cultco Company Ltd Has Set the Following Direct Material Standards