Gipple Corporation makes a product that uses a material with the quantity standard of 9.2 grams per unit of output and the price standard of $7.90 per gram. In January the company produced 5,300 units using 26,770 grams of the direct material. During the month the company purchased 29,300 grams of the direct material at $8.00 per gram. The direct materials purchases variance is computed when the materials are purchased.The materials price variance for January is:
A) $4,876 Favorable
B) $2,930 Unfavorable
C) $4,876 Unfavorable
D) $2,930 Favorable

Question

Quizplus · Accepted Answer

To calculate the material price variance, we need to compare the actual price paid per gram with the standard price per gram.

Actual price per gram = $8.00
Standard price per gram = $7.90

Therefore, the variance per gram is: 
$8.00 - $7.90 = $0.10 unfavorable

Total quantity of materials purchased = 29,300 grams
Total variance = $0.10 x 29,300 = $2,930 unfavorable.

Thus, the correct answer is B.

Gipple Corporation Makes a Product That Uses a Material with the Quantity