Townsend Company budgeted 2,500 pounds of direct materials costing $32.00 per pound to make 1,250 units of product. The company actually used 2,400 pounds costing $35.50 per pound to make the 1,250 units. What is the direct materials price variance?
A) $8,400 unfavorable
B) $3,200 favorable
C) $8,750 favorable
D) $5,200 unfavorable

Question

Quizplus · Accepted Answer

The direct materials price variance is calculated as (Actual Price - Standard Price) x Actual Quantity. Here, it is ($35.50 - $32.00) x 2,400 = $8,400 unfavorable.

Townsend Company Budgeted 2,500 Pounds of Direct Materials Costing $32