Roncy Manufacturing uses enhanced powder plastics (EPP) to manufacture a high-pressure board, Dura-Plastic. Information concerning its operation in June was as follows:The direct materials purchase-price variance for June, to the nearest dollar, was:
A) $63,700 unfavorable.
B) $65,520 unfavorable.
C) $69,160 unfavorable.
D) $95,760 unfavorable.

Question

Roncy Manufacturing uses enhanced powder plastics (EPP) to manufacture a high-pressure board, Dura-Plastic. Information concerning its operation in June was as follows:The direct materials purchase-price variance for June, to the nearest dollar, was:
A) $63,700 unfavorable. 
B) $65,520 unfavorable. 
C) $69,160 unfavorable. 
D) $95,760 unfavorable.

Quizplus · Accepted Answer

To calculate the direct materials purchase-price variance, we need to compare the actual purchase price per unit with the standard purchase price per unit, and then multiply the difference by the actual quantity of materials purchased.

Actual purchase price per unit = $579,760 ÷ 7,760 = $74.60
Standard purchase price per unit = $70.00
Actual quantity of materials purchased = 7,760

Direct materials purchase-price variance = ($74.60 - $70.00) x 7,760 = $35,472 unfavorable.

Therefore, the direct materials purchase-price variance for June was $69,160 unfavorable (rounded to the nearest dollar), which is closest to choice C.

Roncy Manufacturing Uses Enhanced Powder Plastics (EPP) to Manufacture a High-Pressure