If Company XYZ purchased 30 000 kg of brass metal at an actual price of $7.10 per kg (standard price is $7.00 per kg), the entry to the direct material price variance should be
A) $3000 debit.
B) $3000 credit.
C) $1500 debit.
D) $1500 credit.

Question

Quizplus · Accepted Answer

The direct material price variance is calculated as (Actual Price - Standard Price) x Actual Quantity. Here, it is ($7.10 - $7.00) x 30,000 kg = $0.10 x 30,000 kg = $3,000. Since the actual price is higher than the standard price, it is an unfavorable variance, recorded as a debit.

If Company XYZ Purchased 30 000 Kg of Brass Metal