Scotto Designs has the following standards to make one scarf: $\begin{array}{lrr}
& {\text { Standard Quantity }} & \text { Standard Price } \
\text { Direct materials }& 1.2 \text { yards per scarf } & \$ 4.70 \text { per yard } \
\text { Direct labor } & 0.15 \text { hours per scarf } & \$ 11.00 \text { per hour }
\end{array}$ The company used 985 yards of material in order to make 800 scarves in April.The company purchased 1,100 yards at $4.60 per yard.How much is the direct materials price variance?
A)$110 favorable
B)$118 unfavorable
C)$8 unfavorable
D)$98.50 favorable

Question

Scotto Designs has the following standards to make one scarf: $\begin{array}{lrr} 
& {\text { Standard Quantity }} & \text { Standard Price } \
\text { Direct materials }& 1.2 \text { yards per scarf } & \$ 4.70 \text { per yard } \
\text { Direct labor } & 0.15 \text { hours per scarf } & \$ 11.00 \text { per hour }
\end{array}$ The company used 985 yards of material in order to make 800 scarves in April.The company purchased 1,100 yards at $4.60 per yard.How much is the direct materials price variance?
A)$110 favorable
B)$118 unfavorable
C)$8 unfavorable
D)$98.50 favorable

Quizplus · Accepted Answer

The direct materials price variance is calculated as (Actual Price - Standard Price) * Actual Quantity. Here, the actual price per yard is $4.60, the standard price is $4.70, and the actual quantity used is 985 yards. So, the variance is (4.60 - 4.70) * 985 = -0.10 * 985 = -$98.50, which is favorable because the actual price is less than the standard price. However, since the question asks for the variance in a positive figure for favorable variances, the correct answer is $98.50 favorable, not option A as initially indicated. The correct choice should have been D, based on the explanation provided.

Scotto Designs Has the Following Standards to Make One Scarf