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Parallel Enterprises has collected the following data on one of its products. During the period the company produced 25,000 units. The direct materials price variance is:Direct materials standard (7 kg. @ $2/kg.) $14 per finished unitActual cost of materials purchased $322,500Actual direct materials purchased and used 150,000 lbs.$27,500 unfavorable.$50,000 unfavorable.$50,000 favorable.$22,500 unfavorable.$22,500 favorable.

Respuesta :

Answer:

Direct Material Price Variance = $22,500 Unfavorable

Explanation:

Direct Material Price Variance = (Standard Price - Actual Price) [tex]\times[/tex] Actual Quantity used.

Here provided, Standard Price = $2 per kg

Actual rate [tex]\times[/tex] Actual quantity = $322,500

Actual Quantity = 150,000 kgs.

Thus, Standard Price [tex]\times[/tex] Actual quantity = $2 [tex]\times[/tex] 150,000 = $300,000

Therefore,

Direct Material Price Variance = $300,000 - $322,500 = - $22,500

As the actual cost is higher than the standard cost for actual units used the variance is unfavorable.

Direct Material Price Variance = $22,500 Unfavorable

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