The following materials standards have been established for a particular product: Standard quantity per unit of output 5.3 meters Standard price $ 17.20 per meter The following data pertain to operations concerning the product for the last month: Actual materials purchased 8,100 meters Actual cost of materials purchased $ 141,345 Actual materials used in production 7,600 meters Actual output 1,400 units What is the materials price variance for the month

Direct material price variance = $2,025 unfavorable.

Explanation:

Giving the following information:

Standard price $ 17.20 per meter

Actual materials purchased 8,100 meters

Actual cost of materials purchased $ 141,345

Actual materials used in production 7,600

First, we need to calculate the actual price per meter:

Actual price = 141,345/8,100 = $17.45

Now, using the following formula, we can calculate the material price variance:

Direct material price variance = (standard price - actual price) * actual quantity

Direct material price variance = (17.20 - 17.45) * 8,100 = $2,025 unfavorable.

It is unfavorable because the actual price paid for meter is higher than estimated.