Mid City Products Inc. (MCP), developed standard costs for direct material and direct labor. In 2017, MCP estimated the following standard costs for one of their most popular products.

During September, MCP produced and sold 1,000 units using 1,400 pounds of direct materials at an average cost per pound of $8.00 and 160 direct labor hours at an average wage of $13.50 per hour.
The direct material price variance during September is ________.
A) $840 favorable
B) $840 unfavorable
C) $2,600 unfavorable
D) $2,600 favorable

Question

Mid City Products Inc. (MCP), developed standard costs for direct material and direct labor. In 2017, MCP estimated the following standard costs for one of their most popular products.

During September, MCP produced and sold 1,000 units using 1,400 pounds of direct materials at an average cost per pound of $8.00 and 160 direct labor hours at an average wage of $13.50 per hour.
The direct material price variance during September is ________.
A) $840 favorable 
B) $840 unfavorable 
C) $2,600 unfavorable 
D) $2,600 favorable

Quizplus · Accepted Answer

Direct material price variance = 1,400 × ($8.00 - $8.60) = $840 F