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 =$10,160 unfavorable

Explanation:

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

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