July’s direct material price variance is

ACCOUNTING

Multiple Choice

Sawyer Industries Inc. (SII) developed standard costs for direct material and direct labor. In 2004, SII estimated the following standard costs for one of their major products, the 30-gallon heavy-duty plastic container.

Budgeted quantity Budgeted price

Direct materials 0.20 pounds $25 per pound

Direct labor 0.10 hours $15 per hour



During July SII produced and sold 10,000 containers using 2,200 pounds of direct materials at an average cost per pound of $24 and 1,050 direct manufacturing labor hours at an average wage of $14.75 per hour.


July’s direct material price variance is

a. $2,800 favorable

b. $2,200 favorable

c. $5,000 unfavorable

d. none of the above

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