Use the information below to answer the following question(s).
Sawyer Industries Inc. (SII), developed standard costs for direct material and direct labour. In 2013, SII estimated the following standard costs for one of their major products, the 30-litre heavy-duty plastic container.
During July, SII produced and sold 10,000 containers using 2,200 kilograms of direct materials at an average actual cost per kilogram of $24 and 1,050 direct manufacturing labour hours at an average actual wage of $14.75 per hour.
-July's direct material price variance is
A) $2,800 favourable.
B) $2,200 favourable.
C) $5,000 unfavourable.
D) $2,200 unfavourable.
E) $2,000 favourable.

Question

Use the information below to answer the following question(s).
Sawyer Industries Inc. (SII), developed standard costs for direct material and direct labour. In 2013, SII estimated the following standard costs for one of their major products, the 30-litre heavy-duty plastic container.
  During July, SII produced and sold 10,000 containers using 2,200 kilograms of direct materials at an average actual cost per kilogram of $24 and 1,050 direct manufacturing labour hours at an average actual wage of $14.75 per hour.
-July's direct material price variance is
A) $2,800 favourable. 
B) $2,200 favourable. 
C) $5,000 unfavourable. 
D) $2,200 unfavourable. 
E) $2,000 favourable.

Quizplus · Accepted Answer

The direct material price variance is calculated as (Actual Price - Standard Price) x Actual Quantity. The problem statement suggests a $2,200 favourable variance, indicating the actual price was lower than the standard price.

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