Question

QUESTION 8 Keep It Safe, Inc., manufactures a popular protective case for mobile telephones. The standard quantity of titanium alloy per telephone $210,00. Keep it sadeprodced steIn January, Keep It Safe purchased 2,0 grams of the alloy for a total of 210,000. Keep It Safe produced 3,800 telephones. What was the direct material price variance for the alloy in January? O a. $20,000 Unfavorable. O b. $20,000 Favorable. c. $10,000 Favorable. O d. $10,000 Unfavorable.

Answer 1

Standard materials per unit = 0.50 grams
Standard price per gram = $100
Actual materials used = 2,000 grams
Actual materials cost = $210,000
Actual units produced = 3,800

Direct Materials Price Variance = Actual materials cost - Actual materials used * Standard price per gram
Direct Materials Price Variance = $210,000 - 2,000 * $100
Direct Materials Price Variance = $10,000 Unfavorable

So, the direct material price variance for the alloy in January is $10,000 Unfavorable