The standard materials cost to produce 1 unit of Product R is 6 pounds of material at a standard price of $50 per pound. In manufacturing 8,000 units, 47,000 pounds of material were used at a cost of $51 per pound.
- What is the direct materials price variance?
A) $3,000 favorable.
B) $50,000 unfavorable.
C) $47,000 favorable.
D) $47,000 unfavorable.
E) $50,000 favorable.

Question

Quizplus · Accepted Answer

The direct materials price variance is calculated as the difference between the actual cost per pound of material and the standard cost per pound of material, multiplied by the actual quantity of materials used.

In this case, the actual cost per pound of material is $51, which is $1 higher than the standard cost of $50 per pound. The actual quantity of materials used is 47,000 pounds.

Therefore, the direct materials price variance is:

($51 - $50) x 47,000 = $47,000 unfavorable.

The Standard Materials Cost to Produce 1 Unit of Product