Information on Rex Co.\'s direct material costs for May follows: Actual quantity
ID: 2499814 • Letter: I
Question
Information on Rex Co.'s direct material costs for May follows:
Actual quantity of direct materials purchased and used = 30,000 pounds
Actual cost of direct materials = $84,000
Unfavorable direct materials quantity variance = $3,000
Standard quantity of direct materials allowed for May production = 29,000 pounds
For the month of May, what was Rex's direct materials price variance?
$2,800 favorable
$2,800 unfavorable
$6,000 unfavorable
$6,000 favorable
Please show your work. Thank you in advance
$2,800 favorable
$2,800 unfavorable
$6,000 unfavorable
$6,000 favorable
Please show your work. Thank you in advance
Explanation / Answer
Material Quantity Variance=Standard Price(Standard Quantity -Actual Quantity)
-3,000 =Standard Price(29,000-30000)
-3,000 =Standard Price(-1000)
Standard Price =$3 per unit
Material Price Variance= Actual quantity required (Standard price - actual price)
=30000(3-(84000/30000))
=30000(3-2.8)
=30000*0.2
=$6,000(Favourable)
Therefore,Option D is correct