Grayson Industries has collected the following data for one of its products: $$\begin{array} { | l | l | }
\hline \text { Direct materials standard (4 pounds per unit @ \$0.50/b.) } & \$ 2 \text { per finished good } \
\hline \text { Direct materials flexible budget variance-unfavorable } & \$ 10,000 \
\hline \text { Actual direct materials used } & 40,000 \text { pounds } \
\hline \text { Actual firished goods produced } & 24,000 \text { urits } \
\hline
\end{array}$$
-How much is the direct materials price variance?

Question

Grayson Industries has collected the following data for one of its products: $$\begin{array} { | l | l | } 
\hline \text { Direct materials standard (4 pounds per unit @ \$0.50/b.) } & \$ 2 \text { per finished good } \
\hline \text { Direct materials flexible budget variance-unfavorable } & \$ 10,000 \
\hline \text { Actual direct materials used } & 40,000 \text { pounds } \
\hline \text { Actual firished goods produced } & 24,000 \text { urits } \
\hline
\end{array}$$ 
-How much is the direct materials price variance?

Quizplus · Accepted Answer

Without knowing the actual direct materials price and the standard direct materials price, we cannot calculate the direct materials price variance. However, if the variance is unfavorable, it means that the actual price paid for the materials was higher than the standard price. If the variance is favorable, it means that the actual price paid for the materials was lower than the standard price. Since option B is the only unfavorable variance option, it is the best choice.

Grayson Industries Has Collected the Following Data for One of Its