Community Manufacturing Inc. developed the following standard costs for direct material and direct labor for one of their major products, the 30-gallon heavy-duty plastic container.

During May, Community produced and sold 10,000 containers using 2,200 pounds of direct materials at an average cost per pound of $24 and 1,050 direct labor hours at an average wage of $14.75 per hour.
-May's direct material price variance was:
A)$2,800 favorable.
B)$2,200 favorable.
C)$5,000 unfavorable.
D)None of the above is correct.

Question

Community Manufacturing Inc. developed the following standard costs for direct material and direct labor for one of their major products, the 30-gallon heavy-duty plastic container.
  
During May, Community produced and sold 10,000 containers using 2,200 pounds of direct materials at an average cost per pound of $24 and 1,050 direct labor hours at an average wage of $14.75 per hour.
-May's direct material price variance was:
A)$2,800 favorable. 
B)$2,200 favorable. 
C)$5,000 unfavorable. 
D)None of the above is correct.

Quizplus · Accepted Answer

B)(AP - SP)× AQ = ($24 - $25)× 2,200lbs = $2,200 F