**Understanding Direct Material Price Variance****Scenario:**Last month, the direct material quantity variance in the production of nail filers by Rudman Pte Ltd. was $1,494 favorable. Here are the details:1. **Direct Material Purchased and Used:** 70,000 cubic yards2. **Standard Quantity for the Output Amount:** 70,200 cubic yards3. **Cost of Purchased Direct Materials:** $573,206**Question:**What was the month’s direct material price variance?**Steps to Solve:**1. Calculate the standard cost of the actual quantity purchased.2. Determine the actual cost of the purchased materials.3. Find the price variance by comparing these two amounts.**Formulas:**- **Direct Material Price Variance** = (Actual Quantity Purchased * Standard Price) - Actual Cost- If the variance is negative, it is unfavorable. If positive, it is favorable.**Given:**1. Standard Cost: Not given directly, needs to be derived.2. Actual Quantity Purchased: 70,000 cubic yards3. Actual Cost: $573,2064. Quantity Variance Favorable: $1,494**Solution:**1. Establish the Standard Cost.2. Calculate the total cost if the standard price was used for the actual quantity.3. Calculate the variance by comparing with actual cost.Then, determine if the variance is favorable or unfavorable based on the sign of the result.**User Response Options:**- Screens indicate a choice between "Unfavorable" or "Favorable".- The correct box should ideally be ' Favorable'.End result and validation on the educational website should acknowledge the method and walk-through approach, ensuring the learner understands each segment of the variable calculations.

Name: **Understanding Direct Material Price Variance****Scenario:**Last mon
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Description: **Understanding Direct Material Price Variance****Scenario:**Last month, the direct material quantity variance in the production of nail filers by Rudman Pte Ltd. was $1,494 favorable. Here are the details:1. **Direct Material Purchased and Used:**

Standard price = DM quantity variance / (Standard quantity - Actual quantity) = $1,494 / (70,200 -…

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The direct material quantity variance last month in the production of nail filers by Rudman Pte Ltd. was $1,494 Favorable. The direct material purchased and used was 70,000 cubic yards, while the standard quantity for the output amount was 70,200 cubic yards. The cost of the month's purchased direct materials was $573.206. What was the month's direct material price variance?$ ✓ Unfavorable Favorable

The direct material quantity variance last month in the production of nail filers by Rudman Pte Ltd. was $1,494 Favorable. The direct material purchased and used was 70,000 cubic yards, while the standard quantity for the output amount was 70,200 cubic yards. The cost of the month's purchased direct materials was $573.206. What was the month's direct material price variance?$ ✓ Unfavorable Favorable

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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