Exeter has a material standard of 1 pound per unit of output.Each pound has a standard price of $26 per pound.During July,Exeter paid $66,100 for 2,475 pounds,which they used to produce 2,350 units.What is the direct materials price variance?
A)$1,750 unfavorable
B)$1,300 favorable
C)$6,300 unfavorable
D)$5,000 unfavorable

Question

Quizplus · Accepted Answer

The standard cost for materials for 2,350 units is:

2,350 units x 1 pound per unit x $26 per pound = $61,100

The actual cost for materials for 2,350 units is:

2,475 pounds x $26 per pound = $64,350

The direct materials price variance is:

Actual cost - (Standard price x Actual quantity) = $64,350 - ($26 x 2,475) = $1,750 unfavorable.

Therefore, the best choice is A - $1,750 unfavorable.

Exeter Has a Material Standard of 1 Pound Per Unit