Oxford Co. has a material standard of 2.1 pounds per unit of output. Each pound has a standard price of $10 per pound. During February, Oxford Co. paid $57,220 for 4,840 pounds, which were used to produce 2,400 units. What is the direct materials price variance?
A) $6,820 unfavorable
B) $8,820 unfavorable
C) $8,820 favorable
D) $6,820 favorable

Question

Quizplus · Accepted Answer

To calculate the direct materials price variance, we need to compare the actual price paid per pound to the standard price per pound.
- Standard price per pound = $10
- Actual price paid per pound = $57,220 ÷ 4,840 pounds = $11.80 (rounded to nearest cent)

Now we can calculate the direct materials price variance:
- Direct materials price variance = (actual price - standard price) x actual quantity 
- Direct materials price variance = ($11.80 - $10.00) x 4,840 pounds
- Direct materials price variance = $8,680 unfavorable

Therefore, the correct answer is B, $8,820 unfavorable.

Oxford Co Has a Material Standard of 2