COST ACCOUNTING
STANDARD COSTING
Question
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A formula for computing direct materials price variance is
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Actual quantity purchased × (Actual rate-Standard rate)
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Standard quantity purchased × (Actual rate + Standard rate)
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Actual quantity purchased × (Actual rate + Standard rate)
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Standard quantity purchased × (Actual rate-Standard rate)
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Explanation:
Detailed explanation-1: -The formula for this variance is:(standard price per unit of material × actual units of material consumed) – actual material cost. (standard price per unit of material × actual units of material consumed) – actual material cost.
Detailed explanation-2: -Direct Material Cost Variance = Standard cost of direct materials specified for actual output achieved-Actual cost of direct materials used. The standard cost of direct material is: Standard quantity of direct materials x Standard price per unit of direct materials.
Detailed explanation-3: -Answer and Explanation: Direct Materials Price Variance = (Standard Price-Actual Price) x Actual lbs. Direct Materials Price Variance = ($8.50-($51, 756.25 / 6, 125 lbs.))
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