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Answer :
Answer and Explanation :
The computation is shown below:
Direct materials price variance is
= (actual price - standard price) × actual quantity
= ($2.80 - $2.75) × 145,000
= $7,250 unfavorable
Because actual price is higher than standard price so this is unfavorable
Direct materials quantity variance is
= (actual quantity - standard quantity) × standard price
= (145,000 - 150,000) × $2.75
= -$13,750 favorable
Sum of direct material cost variance = $7,250 - $13,750
= -$6,500 favorable
We simply applied the above formulas
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