Genent Industries, Inc. (GII), developed standard costs for direct material and direct labor. In 2017, GII estimated the following standard costs for one of their major products, the 30-gallon heavy-duty plastic container.

During July, GII produced and sold 4,000 containers using 1,700 pounds of direct materials at an average cost per pound of $15 and 3,225 direct manufacturing labor hours at an average wage of $15.25 per hour.
The direct material price variance during July is ________.
A) $20,000 unfavorable
B) $8,500 favorable
C) $8,500 unfavorable
D) $2,000 unfavorable

Question

Genent Industries, Inc. (GII), developed standard costs for direct material and direct labor. In 2017, GII estimated the following standard costs for one of their major products, the 30-gallon heavy-duty plastic container.

During July, GII produced and sold 4,000 containers using 1,700 pounds of direct materials at an average cost per pound of $15 and 3,225 direct manufacturing labor hours at an average wage of $15.25 per hour.
The direct material price variance during July is ________.
A) $20,000 unfavorable 
B) $8,500 favorable 
C) $8,500 unfavorable 
D) $2,000 unfavorable

Quizplus · Accepted Answer

Direct material price variance = 1,700 × ($20 - $15) = $8,500 F