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11 November, 16:46

Hushovd Iron Works has collected the following data for its Thunderbolt line of products:Direct materials standard 10 pounds per unit Direct materials standard cost $0.75 per pound Actual material purchased cost $0.85 per pound Actual direct materials purchased 40,000 pounds Actual quantity of direct materials used 35,000 pounds Actual finished goods produced 4,500 unitsWhat is the direct material price variance? A) $4,000 favorableB) $4,000 unfavorableC) $3,500 favorableD) $3,500 unfavorable

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  1. 11 November, 18:30
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    The correct answer is D: $3500 unfavorable

    Explanation:

    Giving the following information:

    Standard:

    Direct materials standard 10 pounds per unit

    Direct materials standard cost $0.75 per pound

    Actual:

    Material purchased cost $0.85 per pound

    Direct materials purchased 40,000 pounds

    Direct materials used 35,000 pounds

    Finished goods produced 4,500 units

    Direct material price variance = (SP-AP) * AQ

    SP = standard price

    AP = actual price

    AQ = standard quantity

    Direct material price variance = (0.75-0.85) * 35000

    Direct material price variance = $3500 unfavorable
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