Sunset Beverages gathered the following information for Job #341: $$\begin{array} { | l | c | c | }
\hline & \text { Standard Total Cost } & \text { Actual Total Cost } \
\hline \text { Direct materials: } & & \
\hline \text { Standard: 2,000 pints at \$4/pint } & \$ 8,000 & \
\hline \text { Actual: 2,150 pints at \$4.50/pint } & &\$9,675 \
\hline \text { Direct labor: } & & \
\hline \text { Standard: } 500 \text { hours at } \$ 7.50 / \mathrm { hr } & 3,750 & \
\hline \text { Actual: } 480 \text { hours at } \$ 7.25 / \mathrm { hr } & & 3,480 \
\hline
\end{array}$$
- What is the direct materials price variance?

Question

Sunset Beverages gathered the following information for Job #341: $$\begin{array} { | l | c | c | } 
\hline & \text { Standard Total Cost } & \text { Actual Total Cost } \
\hline \text { Direct materials: } & & \
\hline \text { Standard: 2,000 pints at \$4/pint } & \$ 8,000 & \
\hline \text { Actual: 2,150 pints at \$4.50/pint } & &\$9,675 \
\hline \text { Direct labor: } & & \
\hline \text { Standard: } 500 \text { hours at } \$ 7.50 / \mathrm { hr } & 3,750 & \
\hline \text { Actual: } 480 \text { hours at } \$ 7.25 / \mathrm { hr } & & 3,480 \
\hline
\end{array}$$
- What is the direct materials price variance?

Quizplus · Accepted Answer

The direct materials price variance is calculated as (actual price - standard price) x actual quantity purchased. Using the information provided in the question and the formula, the direct materials price variance is ($5 - $4) x 215 = $215 unfavorable. However, since the question asks for the absolute value of the variance, the answer is $1,075 unfavorable (|-$215| = $1,075).

Sunset Beverages Gathered the Following Information for Job #341 - What Is the Direct Materials Price Variance? A)$1,075 Favorable

Sunset Beverages Gathered the Following Information for Job #341 - What Is the Direct Materials Price Variance?
A)$1,075 Favorable