Question

Dvorak Company produces a product that requires 5 standard pounds per unit. The standard price is $2.50 per pound. If 1,000 units required 4,500 pounds, which were purchased at $3.00 per pound, what is the direct materials (a) price variance, (b) quantity variance, and (c) total direct materials cost variance

Answer 1

Answer:

Direct material price variance= $2,250 unfavorable

Direct material quantity variance= $1,250 favorable

Total variance= $1,000 unfavorable

Explanation:

To calculate the direct material price and quantity variance, we need to use the following formulas:

Direct material price variance= (standard price - actual price)*actual quantity

Direct material price variance= (2.5 - 3)*4,500

Direct material price variance= $2,250 unfavorable

Direct material quantity variance= (standard quantity - actual quantity)*standard price

Standard quantity= 5*1,000= 5,000

Direct material quantity variance= (5,000 - 4,500)*2.5

Direct material quantity variance= $1,250 favorable

Total variance= 1,250 - 2,250= $1,000 unfavorable