The actual cost of direct materials is $10.50 per pound. The standard cost per pound is $11.75. During the current period, 10,000 pounds were used in production and 11,500 pounds were purchased. The standard quantity for actual units produced is 9,900 pounds. How much is the direct materials price variance, assuming it is recorded at purchase point?
A) $14,375 favorable
B) $14,375 unfavorable
C) $12,500 unfavorable
D) $12,500 favorable

Question

Quizplus · Accepted Answer

The direct materials price variance is calculated as (Actual Price - Standard Price) x Quantity Purchased. Here, it is ($10.50 - $11.75) x 11,500 = -$14,375, which is favorable because the actual cost is less than the standard cost.

The Actual Cost of Direct Materials Is $10