A Company Established a Direct Material Standard of 2 Pounds

question 119

Multiple Choice

A company established a direct material standard of 2 pounds of material at a cost of $6 per pound for unit produced.During August the company produced 6,000 units of product; 10,000 pounds of direct material that cost $6.50 per pound were used in the production process.Compute the direct material price variance for August.

• A) $5,000 unfavorable
• B) $12,000 unfavorable
• C) $5,000 favorable
• D) $12,000 favorable
• E) $7,000 favorable

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