Boxes Company has collected the following data for one of its products:
$$\begin{array} { | l | l | }
\hline \text { Direct materials standard (3 pounds @ \$1/lb.) } & \$ 3 \text { per finished good } \
\hline \text { Direct materials flexible budget variance-unfavorable } & \$ 14,000 \
\hline \text { Actual direct materials used } & 100,000 \text { pounds } \
\hline \text { Actual finished goods produced } & 25,000 \text { units } \
\hline
\end{array}$$ How much is the direct materials price variance?
A) $11,000 F
B) $25,000 F
C) $11,000 U
D) $25,000 U

Question

Boxes Company has collected the following data for one of its products:
$$\begin{array} { | l | l | } 
\hline \text { Direct materials standard (3 pounds @ \$1/lb.) } & \$ 3 \text { per finished good } \
\hline \text { Direct materials flexible budget variance-unfavorable } & \$ 14,000 \
\hline \text { Actual direct materials used } & 100,000 \text { pounds } \
\hline \text { Actual finished goods produced } & 25,000 \text { units } \
\hline
\end{array}$$ How much is the direct materials price variance?
A) $11,000 F
B) $25,000 F
C) $11,000 U
D) $25,000 U

Quizplus · Accepted Answer

The direct materials price variance is calculated as the difference between the actual price paid for the materials and the standard price. In this case, the actual price paid is not given, so we cannot calculate the direct materials price variance. However, we can calculate the direct materials quantity variance, which is the difference between the actual quantity of materials used and the standard quantity of materials allowed for the actual output. In this case, the actual quantity of materials used is 100,000 pounds, and the standard quantity of materials allowed for the actual output is 75,000 pounds (25,000 units * 3 pounds per unit). Therefore, the direct materials quantity variance is 25,000 pounds unfavorable.

Boxes Company Has Collected the Following Data for One of Its