Jackson Industnes uses a standerd cost syslem in which direct metns inventory is

Question

Jackson Industnes uses a standerd cost syslem in which direct metns inventory is cated at standerd cot Jackson has esabished the folowing adards for one unt of product $470 per pound 700 per hour Direct lebo 260 houn 120 Ourting Mey, Jeckcon purchased 101250 pounds of drect mtnal at total cost of $525 525 The tosal Tectory woes for My were $418,300 90 percent of which wee tor ectbor Jkonmnued material and 60,300 direct labor hours The price verance for the drect maternal acquired by Jecksion Industnes during May O $21450 Untevorable O $24450 Fevorable

Explanation / Answer

Answer: $21,450 Unfavorable

Direct materials price variance = (AQ x AR) – (AQ x SR) = $525525 – (107250 x $4.70) = $525525 - $504075 = $21450 Unfavorable

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