Question

Heavy​ Products, Inc. developed standard costs for direct material and direct labor. In​ 2017, AII estimated the following standard costs for one of their major​ products, the

10minus−gallon

plastic container.

	Budgeted quantity	Budgeted price
Direct materials	0.80.8 pounds	$ 60$60 per pound
Direct labor	0.20.2 hours	$ 10$10 per hour

During​ June, Heavy Products produced and sold

19 comma 00019,000

containers using

20 comma 00020,000

pounds of direct materials at an average cost per pound of

$ 66$66

and

15 comma 20015,200

direct manufacturing

laborminus−hours

at an average wage of

$ 11.00$11.00

per hour.

The direct material price variance during June is​ ________.

Answer 1

Working Notes:				Actual output =		19000	Units
	Actual Cost		Standard Cost per unit		Standard Cost for Actual Output
	Actual Quantity	AP	Actual Cost		Standard Qunatity	SP	Standard Cost		Standard Qunatity	SP	Standard Cost
	20000	$             66.00	$             13,20,000		0.8	$ 60.00	$                     48.00		15200	$ 60.00	$               9,12,000
	Pounds				Pounds				(19,000 X 0.8)
	SOLUTION :
	Direct Material price Variance = (	Standard Price	-	Actual Price	) "X"	Actual Quantity
	Direct Material price Variance = (	$                     60.00	-	$                      66.00	) "X"	20000
	Direct Material price Variance =	$                        6.00	"X"	20000
	Direct Material price Variance =	$               1,20,000	Unfavourable
	Answer = Material Price variance during june is $ 120,000