During August, 10,000 pounds of raw material were purchased at a cost of $18.50 per pound. The direct material price variance was $1,000 favorable. What was the standard price per pound?
A) $18.60
B) $18.40
C) $17.60
D) $17.40

Question

Quizplus · Accepted Answer

The direct material price variance formula is (Actual Price - Standard Price) x Actual Quantity. Given a favorable variance of $1,000 and an actual price of $18.50 per pound for 10,000 pounds, the calculation is ($18.50 - Standard Price) x 10,000 = $1,000. Solving for the Standard Price gives $18.60 per pound.

During August, 10,000 Pounds of Raw Material Were Purchased at a Cost