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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facundobuzzetti facundobuzzetti · Answer 1 · 2020-04-05T03:28:20+02:00

Answer:

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

andromache andromache · Answer 2 · 2022-04-07T12:35:34+02:00

The direct material price variance should be considered as the $2,740 unfavorable.

Since

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

Now we know that

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

= (6 - 6.1)*27,400

= $2,740 unfavorable

Hence, The direct material price variance should be considered as the $2,740 unfavorable.

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