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Answer :
Cheese Products Inc.'s actual cost for materials matches the standard cost, indicating no variance. The answer is none of the provided options (A, B, C, or D) because the direct materials price variance is $0.
To calculate Cheese Products Inc.'s direct materials price variance, we need to compare the actual price paid for the materials with the standard price.
First, let's find the actual cost of materials used:
Actual cost = Actual quantity used × Actual price per pound
Actual cost = 145,000 pounds × $7.50/pound
Actual cost = $1,087,500
Next, let's find the standard cost of materials used:
Standard cost = Standard quantity allowed × Standard price per pound
Since the company purchased 160,000 pounds and used 145,000 pounds, the standard quantity allowed is 145,000 pounds.
Standard cost = 145,000 pounds × $7.50/pound
Standard cost = $1,087,500
Now, we can calculate the direct materials price variance:
Direct materials price variance = Actual cost - Standard cost
Direct materials price variance = $1,087,500 - $1,087,500
Direct materials price variance = $0
Therefore, the direct materials price variance is $0. This means that Cheese Products Inc.'s actual cost for materials matches the standard cost, indicating no variance.
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