Question

Parallel 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. @ $1.70/kg.) $11.90 per finished unit Actual cost of materials purchased $266,800 Actual direct materials purchased and used 144,000 kgs.

Answer 1

Material Price variance = Actual Quantity purchased* (Actual Price - Standard Price)

Material Price variance = 144,000 * (($266,800/144,000) - $1.70)

Material Price variance = $22,000 Unfavorable

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