B. This result is calculated using the quantity of materials allowed for the production, 22,500 pounds (3 lb. Per unit of finished product × 7,500 units produced). However, to calculate the purchase price variance, we needto use the purchased quantity of material (25,000 pounds). See the correct answer for a complete explanation.

C. The purchase price variance is calculated as follows: (AP - SP) × AQ, where AQ is the actual quantity purchased. The actual price for the pound of material is $1.55 ($38,750 ÷ 25,000). The standard price is $1.60. The quantity purchased is 25,000. The direct materials purchase price variance is ($1.55 - $1.60) × 25,000 = $(1,250) favorable. The variance is favorable because the actual price the materials were purchased for is less than the standard price.

D. This result is calculated using the standard quantity of materials, 24,000 pounds (3 lb. per unit of finished product and 8,000 units budgeted for the production). However, to calculate the purchase price variance, we need to use the purchased quantity of material (25,000 pounds). See the correct answer for a complete explanation.