A company established a direct material standard of 2 pounds of material at a cost of $6 per pound for unit produced.During August the company produced 6,000 units of product; 10,000 pounds of direct material that cost $6.50 per pound were used in the production process.Compute the direct material price variance for August.
A) $5,000 unfavorable
B) $12,000 unfavorable
C) $5,000 favorable
D) $12,000 favorable
E) $7,000 favorable

Question

Quizplus · Accepted Answer

(10,000 lbs.)($6 - 6.50) = $5,000 unfavorable

A Company Established a Direct Material Standard of 2 Pounds