Madden corporation manufactures tminus−shirts, which is its only product. the standards for tminus−shirts are as follows: standard direct materials cost per yard $ 8 standard direct materials quantity per tminus−shirt (yards) 1.5 during the month of may, the company produced 1,250 tminus−shirts. related production data for the month follows: actual yards of direct material purchased 1,400 actual direct materials total cost $ 15,500 what is the direct materials price variance for the month? a. $4,300 unfavorable b. $3,800 favorable c. $4,300 favorable d. $3,800 unfavorable

The correct option is A

Explanation:

The direct materials price variance for the month is computed as:

Direct Material Price Variance = [Actual yards of direct material purchased × (Actual direct materials total cost / Actual yards of direct material purchased ) -    Standard direct materials cost per yard]

Direct Material Price Variance = [1,400 × ($15,500/ 1,400) - $8]

                                                  = [1,400 × ($11.0714 - $8)]

                                                  = 1,400 × $3.0714

                                                  = $4,300

It is unfavourable as the Actual Price is more than the standard price.

Therefore, the correct answer is $4,300 unfavourable which is option A.

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