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Gipple Corporation makes a product that uses a material with the quantity standard of 8.4 grams...

Gipple Corporation makes a product that uses a material with the quantity standard of 8.4 grams per unit of output and the price standard of $7.10 per gram. In January the company produced 4,500 units using 25,970 grams of the direct material. During the month the company purchased 28,500 grams of the direct material at $7.30 per gram. The direct materials purchases variance is computed when the materials are purchased.

The materials price variance for January is:

Note whether the price variance is favorable or unfavorable

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Answer #1

Materials Price Variance

= (Standard price - Actual price) * Actual quantity purchased

= (7.10 - 7.30) * 28,500

= 5,700 Unfavorable

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