Marcy's Roses uses a special potting mix that has a standard price of $8.00 per bag. During the year, the purchase price for the potting mix averaged $7.60 per bag. The business purchased and used 2360 bags of potting mix during the year. Calculate the direct materials price variance indicating whether it is favourable or unfavourable.
A) $944 (F)
B) $944 (U)
C) $1 416 (F)
D) $1 416 (U)

Question

Quizplus · Accepted Answer

The direct materials price variance is calculated as (Actual Price - Standard Price) x Actual Quantity. Here, it is ($7.60 - $8.00) x 2360 = -$0.40 x 2360 = -$944, indicating a favorable variance since the actual price is less than the standard price.

Marcy's Roses Uses a Special Potting Mix That Has a Standard