Use the following information to answer the following Questions
Thomas Enterprises purchased 56,000 pounds (cost = $420,000) of direct material to be used in the manufacture of the company's sole product. According the production specifications, each completed unit requires five pounds of direct material at a standard cost of $7.80 per pound. Direct materials consumed by the end of the period totaled 53,500 pounds in the manufacture of 10,900 finished units.
An examination of Thomas’ payroll records revealed that the company worked 22,000 labor hours (cost = $319,000) during the period, and specifications called for each completed unit requiring two hours of labor at a standard cost of $14.80 per hour. Assume that the company computes variances at the earliest point in time.

-Thomas' direct-material price variance was:
A) $16,050F.
B) $16,050U.
C) $16,800F.
D) $16,800U.
E) None of the answers is correct.

Question

Use the following information to answer the following Questions
Thomas Enterprises purchased 56,000 pounds (cost = $420,000) of direct material to be used in the manufacture of the company's sole product. According the production specifications, each completed unit requires five pounds of direct material at a standard cost of $7.80 per pound. Direct materials consumed by the end of the period totaled 53,500 pounds in the manufacture of 10,900 finished units.
An examination of Thomas’ payroll records revealed that the company worked 22,000 labor hours (cost = $319,000) during the period, and specifications called for each completed unit requiring two hours of labor at a standard cost of $14.80 per hour. Assume that the company computes variances at the earliest point in time.

-Thomas' direct-material price variance was:
A) $16,050F.
B) $16,050U.
C) $16,800F.
D) $16,800U.
E) None of the answers is correct.

Quizplus · Accepted Answer

The direct material price variance is calculated as follows:Standard price per pound * (Actual quantity used - Standard quantity allowed)= $7.80 * (53,500 pounds - 54,500 pounds)= $7.80 * (-1,000 pounds)= -$7,800The direct material price variance is unfavorable because the actual price paid for the direct material was higher than the standard price.

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