Cryolite Uses a Standard Costing System to Gauge Results for Their

question 110

Multiple Choice

Cryolite uses a standard costing system to gauge results for their single product. 70,000 kilograms of direct materials were purchased for $385,000. Two kilograms of direct materials are needed to produce one unit of product. In March, the company produced 12,000 units. The standard cost allowed for direct material was $120,000, and there was an unfavourable direct materials efficiency variance of $2,500.
The direct materials price variance for March is:

• A) $25,000 favourable
• B) $25,000 unfavourable
• C) $35,000 favourable
• D) $35,000 unfavourable