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? Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Unfavorable 2,250 a. Direct materials price variance Favorable 1,250 х b. Direct materials quantity variance Unfavorable 1,000 $ c. Total direct materials cost variance

Answer 1

(A)

Material price variance = actual quantity x (standard price - actual price)

= 4500 x ($2.50 - $3)

= $2250 Unfavorable

(B)

Material quantity variance = standard price x (standard quantity - actual quantity)

= $2.50 x (5000 - 4500)

= -$1250 favorable

“use minus sign in the answer box”

Where,

Standard quantity = actual output x standard quantity per unit of output

= 1000 x 5 = 5000 pounds

(C)

Total direct material variance = (standard quantity x standard price) - (actual quantity x actual price)

= (5000 x $2.50) - (4500 x $3)

= $12500 - $13500

= $1000 Unfavorable