Rice Corporation has provided the following information:
Direct material standard per unit: 3 pounds
Standard price per pound: $3.50
Actual number of pounds purchased and used: 1,575
Actual cost of materials purchased: $5,355
Actual number of units produced: 500
What is the direct materials price variance?
A) $157.50 unfavorable
B) $157.50 favorable
C) $150.00 favorable
D) $150.00 unfavorable

Question

Quizplus · Accepted Answer

The direct materials price variance is calculated as (Actual Price - Standard Price) x Actual Quantity. The actual price per pound is $5,355 / 1,575 = $3.40. The standard price is $3.50. Therefore, the variance is ($3.40 - $3.50) x 1,575 = -$157.50, which is favorable because the actual price is less than the standard price.

Rice Corporation Has Provided the Following Information