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What is the price variance of direct materials

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Reference no: EM132527693

Walter's Corporation makes Product XYZ with the following standard costs for Direct Materials:

                                  Standard Quantity                        Standard Price                   Standard Cost per Unit

Direct Materials             10 lb/unit                                   $2.00/lb                    $20/unit

The company in the month of July experienced the following:

  1. Actual production was 6,000 units of Product X.
  2. The company purchased 50,500 lbs of the direct material at a cost of $95,000.
  3. The company used 51,000 lbs of the direct material to produce Product X.

Question 1: What is the price variance of Direct Materials? Is it favorable or unfavorable?

Question 2: What is the quantity variance of Direct Materials? Is it favorable or unfavorable?

Question 3: Based on your answers to (A) and (B), did any problems occur with respect to direct materials?

Reference no: EM132527693

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