Asked by William Russell on Apr 24, 2024
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:
A) $2,482 Favorable
B) $2,740 Unfavorable
C) $2,482 Unfavorable
D) $2,740 Favorable
Materials Price Variance
The difference between the actual cost of materials purchased and the expected (standard) cost, indicating how material cost fluctuations affect production costs.
Quantity Standard
The expected or budgeted quantity regarding inputs or outputs, used as a performance measure or pricing basis.
Price Standard
A predetermined cost that represents what should be paid for a unit of input, such as materials or labor.
- Calculate and analyze direct material variances, including price and quantity variances.
Learning Objectives
- Calculate and analyze direct material variances, including price and quantity variances.
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