We appreciate your visit to Exeter Company has a materials standard of 1 pound per unit of output Each pound has a standard price of 26 per pound During July. This page offers clear insights and highlights the essential aspects of the topic. Our goal is to provide a helpful and engaging learning experience. Explore the content and find the answers you need!
Answer :
The direct materials price variance for Exeter Company is $1,976 unfavorable. This indicates that the company paid $1,976 more for the actual quantity of materials purchased compared to the standard price of $26 per pound.
Option a is correct.
- The direct materials price variance measures the difference between the actual cost paid for materials and the standard cost that should have been paid for the actual quantity purchased. It helps identify whether the company paid more or less for materials compared to the expected standard cost. The formula to calculate the direct materials price variance is:
- Direct Materials Price Variance = (Actual Quantity * Actual Price) - (Actual Quantity * Standard Price)
- Given the information provided:
- 1. Actual quantity purchased: 2,470 pounds
- 2. Actual price paid per pound: $66,196 / 2,470 pounds = $26.80 (rounded)
- 3. Standard price per pound: $26.00
- Substitute the values into the formula:
- Direct Materials Price Variance = (2,470 pounds * $26.80/pound) - (2,470 pounds * $26.00/pound)
- Direct Materials Price Variance = $66,196 - $64,220 = $1,976 (Unfavorable)
- This variance indicates that Exeter Company paid $1,976 more for the actual quantity of materials purchased than it should have, based on the standard price. This could be due to factors such as changes in market prices, supplier negotiations, or purchasing inefficiencies.
- Hence the correct option is (a) - $1,976 unfavorable.
for more questions on price variance -
https://brainly.com/question/25397585
#SPJ11
Thanks for taking the time to read Exeter Company has a materials standard of 1 pound per unit of output Each pound has a standard price of 26 per pound During July. We hope the insights shared have been valuable and enhanced your understanding of the topic. Don�t hesitate to browse our website for more informative and engaging content!
- Why do Businesses Exist Why does Starbucks Exist What Service does Starbucks Provide Really what is their product.
- The pattern of numbers below is an arithmetic sequence tex 14 24 34 44 54 ldots tex Which statement describes the recursive function used to..
- Morgan felt the need to streamline Edison Electric What changes did Morgan make.
Rewritten by : Barada
