Parallel Enterprises has collected the following data on one of its products.During the period the company produced 25,000 units.The direct materials price variance is:
A)$27,500 unfavorable.
B)$50,000 unfavorable.
C)$50,000 favorable.
D)$22,500 unfavorable.
E)$22,500 favorablE.

Question

Parallel Enterprises has collected the following data on one of its products.During the period the company produced 25,000 units.The direct materials price variance is: 
A)$27,500 unfavorable. 
B)$50,000 unfavorable. 
C)$50,000 favorable. 
D)$22,500 unfavorable. 
E)$22,500 favorablE.

Quizplus · Accepted Answer

The direct materials price variance is calculated as follows: 
Actual Quantity x (Actual Price - Standard Price) 
= 25,000 x ($11 - $10) 
= $25,000 unfavorable 
Therefore, the correct answer is D) $22,500 unfavorable.

Parallel Enterprises Has Collected the Following Data on One of Its