Question

arallel Enterprises has collected the following data on one of its products. During the period the company produced 25,000 units. The direct materials price variance is:

Direct materials standard (7 kg. @ $1.75/kg.)	$12.25	per finished unit
Actual cost of materials purchased	$275,850
Actual direct materials purchased and used	145,000	kgs.

rev: 04_16_2018_QC_CS-124628

Multiple Choice

• $30,400 unfavorable.

• $52,500 unfavorable.

• $52,500 favorable.

• $22,100 unfavorable.

• $22,100 favorable.

Answer 1

Answer

• Correct Answer = Option #4: $ 22,100 Unfavourable

Material Price Variance
(	Standard Rate	-	Actual Rate = $ 275850 / 145000 kgs	)	x	Actual Quantity
(	$                                1.75	-	$                       1.90	)	x	145000
	-22100
	Variance		$            22,100.00			Unfavourable-U