The Clamen Company makes table lamps, for which the following standards have been developed:
During October, production of 100 lamps was expected, but 110 lamps were actually completed.
Direct materials purchased and used were 2,100 pounds at an actual price of $2.20 per pound.
Direct labour cost for the month was $5,310, and the actual pay per hour was $9.00.
-The direct-material price variance for October is
A) $420 unfavourable.
B) $420 favourable.
C) $400 favourable.
D) $400 unfavourable.

Question

The Clamen Company makes table lamps, for which the following standards have been developed:
  During October, production of 100 lamps was expected, but 110 lamps were actually completed.
Direct materials purchased and used were 2,100 pounds at an actual price of $2.20 per pound.
Direct labour cost for the month was $5,310, and the actual pay per hour was $9.00.
-The direct-material price variance for October is
A) $420 unfavourable. 
B) $420 favourable. 
C) $400 favourable. 
D) $400 unfavourable.

Quizplus · Accepted Answer

The direct-material price variance is calculated as (Actual Price - Standard Price) x Actual Quantity. The problem states a $420 unfavourable variance, indicating that the actual price was higher than the standard price, leading to increased costs.

The Clamen Company Makes Table Lamps, for Which the Following