Assume the following: The standard price per pound is $2.00. The standard quantity of pounds allowed per unit of finished goods is 4 pounds. The actual quantity of materials purchased and used in production is 50,800 pounds. The actual purchase price per pound of materials was $2.20. The company produced 13,000 units of finished goods during the period. What is the materials price variance

Direct material price variance occurs when the actual quantity of materials are purchased at an actual price per unit higher or lower than the standard price.

Direct material price variance $

50,800 pounds should have cost (50,800× $2) = 101,600

but did cost (50,800× $2.20) = 111,760

Direct material price variance 10,160 unfavorable

Direct material price variance =$10,160 unfavorable

Tundexi Tundexi · Answer 2 · 2021-11-05T11:56:19+01:00

The materials price variance is $10,160 Unfavorable.

The difference between the standard cost and actual cost for the purchased actual quantity of material is the direct material price variance

The formulae for the direct Materials price variance is (Standard price – Actual price) * Actual quantity purchased

Direct Materials price variance = ($2.00 per pound – $2.20per pound) * 50800 pounds

Direct Materials price variance = ($0.20 * 50,800 pounds) Unfavorable

Direct Materials price variance = $10,160 Unfavorable

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