Chapter 23, Problem 3CMA

Frisco Company recently purchased 108,000 units of raw material for $583,200. Three units of raw materials are budgeted for use in each finished good manufactured, with the raw material standard set at $16.50 for each completed product. Frisco manufactured 32,700 finished units during the period just ended and used 99,200 units of raw material. If management is concerned about the timely reporting of variances to improve cost control and bottom-line performance,

the direct materials price variance should be reported as:

1. a. $6,050 unfavorable.
2. b. $9,920 favorable.
3. c. $10,800 unfavorable.
4. d. $10,800 favorable.