Gipple Corporation makes a product that uses a material with the quantity standard of 9.2 grams per unit of output and the price standard of $7.90 per gram. In January the company produced 5,300 units using 26,770 grams of the direct material. During the month the company purchased 29,300 grams of the direct material at $8.00 per gram. The direct materials purchases variance is computed when the materials are purchased.The materials price variance for January is:

A) $4,876 Favorable
B) $2,930 Unfavorable
C) $4,876 Unfavorable
D) $2,930 Favorable

Question

Sofia Rivadeneira · Accepted Answer

Final Answer : B, Explanation :  To calculate the material price variance, we need to compare the actual price paid per gram with the standard price per gram.Actual price per gram = $8.00Standard price per gram = $7.90Therefore, the variance per gram is:$8.00 - $7.90 = $0.10 unfavorableTotal quantity of materials purchased = 29,300 gramsTotal variance = $0.10 x 29,300 = $2,930 unfavorable.Thus, the correct answer is B.

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