What is the direct materials price variance given actual materials cost $17,280 for 18,000 pounds and standard price $1.00 per pound?

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards
From $25.99Unlock all

Prepare for the Accounting SmartBook Test. Practice with tailored questions and helpful hints. Analyze comprehensive explanations for a deep understanding. Ace your exam with confidence!

Multiple Choice

What is the direct materials price variance given actual materials cost $17,280 for 18,000 pounds and standard price $1.00 per pound?

Explanation:
Direct materials price variance measures whether the actual cost per unit is higher or lower than the standard price, applied to the actual quantity used. Actual price per pound = 17,280 / 18,000 = 0.96. Difference from standard price (0.96 − 1.00) = −0.04 per pound. Variance = −0.04 × 18,000 = −720. A negative variance means spending less than the standard, so it’s $720 favorable. The amount differs from the other options because they either imply the wrong sign or the wrong magnitude.

Direct materials price variance measures whether the actual cost per unit is higher or lower than the standard price, applied to the actual quantity used.

Actual price per pound = 17,280 / 18,000 = 0.96.

Difference from standard price (0.96 − 1.00) = −0.04 per pound.

Variance = −0.04 × 18,000 = −720.

A negative variance means spending less than the standard, so it’s $720 favorable. The amount differs from the other options because they either imply the wrong sign or the wrong magnitude.

More Multiple Choice Questions
Subscribe

Get the latest from Passetra

You can unsubscribe at any time. Read our privacy policy