Use the information below to answer the following question(s).
Tractor Corporation produces toy tractors. The company uses the following direct cost categories:
Actual performance and budgeted performance for the company is shown below:
Direct Materials:
Direct Manufacturing Labour:
Direct Marketing Labour:

-What is the price variance of the direct materials?
A) $10,000 favourable
B) $11,500 unfavourable
C) $11,500 favourable
D) $10,000 unfavourable
E) $11,000 favourable

Question

Use the information below to answer the following question(s).
Tractor Corporation produces toy tractors. The company uses the following direct cost categories:
  Actual performance and budgeted performance for the company is shown below:
  Direct Materials:
  Direct Manufacturing Labour:
  Direct Marketing Labour:
 
-What is the price variance of the direct materials?
A) $10,000 favourable 
B) $11,500 unfavourable 
C) $11,500 favourable 
D) $10,000 unfavourable 
E) $11,000 favourable

Quizplus · Accepted Answer

Price variance for direct materials = (Actual price - Budgeted price) x Actual quantity 
= ($1.50 - $1.00) x 20,000 
= $10,000 unfavorable

Use the Information Below to Answer the Following Question(s)