A company developed the following per-unit standards for its product: 2 gallons of direct materials at $8 per gallon. Last month 3000 gallons of direct materials were purchased for $22800. The direct materials price variance for last month was
A) $22800 favorable.
B) $600 favorable.
C) $1200 favorable.
D) $1200 unfavorable.

Question

Quizplus · Accepted Answer

The standard cost for 3000 gallons is 3000 x $8 = $24000. The actual cost was $22800. The variance is $24000 - $22800 = $1200 favorable.

A Company Developed the Following Per-Unit Standards for Its Product