Choice "D" is correct. Woodwork Co. experienced a $22,500 unfavorable direct materials price variance for the current period. The materials price variance formula calculates out as follows:
Materials price variance |
Materials price variance.50 - 7.00) |
Materials price variance |
The materials price variance is unfavorable since we spent more than standard. The trough method is computed as follows:
Actual Quantity x
Actual Price
| | Actual Quantity x
Standard Price
|
|---|
15,000 × $8.50 =
$127,500 |
←Price Variance→
(22,500)
| 15,000 × $7.00 =
$105,000 |
Choice "c" is incorrect. The proposed solution incorrectly calculates the variance as the difference in quantities times the difference in rates.Choice "b" is incorrect. The proposed solution incorrectly calculates the variance as the difference in rates times the standard quantity. The materials price variance uses actual quantity purchased.Choice "a" is incorrect, per the computations above.
