Keegan Inc. budgeted 10,500 pounds of direct materials costing $18.00 per pound to make 4900 units of product. The company actually purchased 10,600 pounds of direct materials costing $27.50 per pound to make the 4900 units. What is the direct materials price variance?

Question

Quizplus · Accepted Answer

Direct materials price variance = (actual price - standard price) x actual quantity purchased
= ($27.50 - $18.00) x 10,600 pounds
= $100,700 unfavorable.