Question
Asked Dec 7, 2019
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The following data relate to direct materials costs for February:

Materials cost per yard: standard, $1.96; actual, $2.03
Standard yards per unit: standard, 4.64 yards; actual, 5.18 yards
Units of production: 9,100

Calculate the direct materials price variance.
a.$3,299.66 unfavorable
b.$637.00 unfavorable
c.$3,299.66 favorable
d.$2,955.68 favorable
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Expert Answer

Step 1

Direct material price variance refers to the difference between the actual price of raw material and the standard price of the raw material. If the standard price of raw material is more than the actual price then the variance calculated is favorable and vice-a-versa.

Step 2

Option (a) is correct.

Given:

Standard cost per yard: $1.96

Actual cost per yard: $2.03

Actual units produced: 9,100

Actual yards used: 5.18 yards

Quantity used for production is calculated as:

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Actualquantity used = actual units produced x actualyards used = 9,100 units × 5.18yards = 47,138 yards

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Step 3

Direct material price variance i...

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(standard price – actual price) Direct material price variance = xactual quantity used = (($1.96– $2.03)x 47,138 yards) =(-$0.07 x 47,138yards) =-$3, 299.66unfavorable

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Variance Analysis

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