Gipple Corporation makes a product that uses a material with the quantity standard of 7.3 grams per unit of output and the price standard of $6.00 per gram. In January the company produced 3,400 units using 24,870 grams of the direct material. During the month the company purchased 27,400 grams of the direct material at $6.10 per gram. The direct materials purchases variance is computed when the materials are purchased. The materials price variance for January is:

Question

Business

Alena Dorsey

1 April, 18:53

Gipple Corporation makes a product that uses a material with the quantity standard of 7.3 grams per unit of output and the price standard of $6.00 per gram. In January the company produced 3,400 units using 24,870 grams of the direct material. During the month the company purchased 27,400 grams of the direct material at $6.10 per gram. The direct materials purchases variance is computed when the materials are purchased. The materials price variance for January is:

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Janelle Cain · Answer 1

Direct material price variance = $2,740 unfavorable

Explanation:

Giving the following information:

Standard direct material per unit = 7.3 grams

Standard cost per gram = $6.00 per gram.

Actual direct material price per gram = $6.1

Actual direct material quantity = 27,400

To calculate the direct material price variance, we need to use the following formula:

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

Direct material price variance = (6 - 6.1) * 27,400 = $2,740 unfavorable