Adler Industries uses a standard cost system in which direct material is carried at standard cost.Adler has established the following standards for one unit of product: standard quantity of 8 pounds, standard price $1.80 per pound.During January, Adler purchased 160,000 pounds of direct material at a cost of $304,000 and used 142,500 pounds in production of 18,700 units.
Required:
Calculate the direct materials price variance and indicate whether the variance is favorable or unfavorable.

Question

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The Answer of Adler Industries uses a standard cost system in which direct material is carried at standard cost.Adler has established the following standards for one unit of product: standard quantity of 8 pounds, standard price $1.80 per pound.During January, Adler purchased 160,000 pounds of direct material at a cost of $304,000 and used 142,500 pounds in production of 18,700 units.
Required:
Calculate the direct materials price variance and indicate whether the variance is favorable or unfavorable.

Adler Industries Uses a Standard Cost System in Which Direct