A company has established 6 pounds of Material M at $2 per pound as the standard

Question

A company has established 6 pounds of Material M at $2 per pound as the standard for the material in its Product A. The company has just produced 1,300 units of this product, using 8,000 pounds of Material M that cost $15,280.The direct materials price variance is (Do not round intermediate calculations):

$320 favorable.

$720 favorable.

$400 favorable.

$400 unfavorable.

$720 unfavorable.

A company has established 6 pounds of Material M at $2 per pound as the standard for the material in its Product A. The company has just produced 1,300 units of this product, using 8,000 pounds of Material M that cost $15,280.The direct materials price variance is (Do not round intermediate calculations):

Explanation / Answer

Answer . B. $720 (Favourable) Direct Material Price Variance = (SP - AP) X AQ Direct Material Price Variance = ($2 - $1.91) X 8000 = $720 (Favourable)

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