Lucas Company has set standards for the manufacturing of clay pots to be 2 pounds of direct materials, per pot, at a cost of $3 per pound. During the current period, 600 pounds of direct materials were purchased for $1872. All of the direct materials were used to manufacture 295 pots. Lucas's direct materials price variance was
A) $102 (U).
B) $72 (U).
C) $102 (F).
D) zero.

Question

Quizplus · Accepted Answer

To calculate the direct materials price variance, we need to compare the actual cost per pound of direct materials to the standard cost per pound.

Standard cost per pound = $3
Actual cost per pound = $1872 ÷ 600 pounds = $3.12

Direct materials price variance = (standard cost per pound - actual cost per pound) x actual quantity purchased

Direct materials price variance = ($3 - $3.12) x 600 = $72 (U)

Lucas Company Has Set Standards for the Manufacturing of Clay