Question

During the latest month, the company purchased and used 58,000 pounds of direct materials at a price of $1.00 per pound to produce 10,000 units of output. Direct labor costs for the month totaled $56,350 based on 4,900 direct labor hours worked. Variable manufacturing overhead costs incurred totaled $15,000 and fixed manufacturing overhead incurred was $10,400. Based on this information, the direct materials price variance for the month was:

Answer 1

Answer:

See below

Explanation:

Given the above information, direct material price variance is computed as;

= (4,900 actual hours × $11.50 actual rate per hour) - (5,000 standard hours × $12.00 standard rate per hour)

= ($56,350 - $60,000)

= $3,650 favourable