Reference no: EM132637605

The direct materials price variance for the recent accounting period is $8,000 unfavorable. The direct material associated with this variance had a standard cost of $200,000.

At the end of the accounting year, the standard cost of the direct material is residing in the following:

Direct materials inventory $20,000

Work in process inventory $30,000

Finished goods inventory $50,000

Costs of goods sold $100,000

Total standard costs of direct materials $200,000

Problem 1: Assuming that the unfavorable variance of $8,000 is a significant (material) amount for this company, how much of the variance would be charged to the finished goods inventory?

Group of answer choices

Option 1: $0

Option 2: $800

Option 3: $2,000

Option 4: $4,000

Option 5: $8,000