Question

Washington waterworks manufactures snorkel gear. during the past month, washington purchased 4,000 pounds of plastic to use in its dive masks, at a cost of $6,800. the standard price for the plastic is $1.6 per pound. the company actually used 3,800 pounds of the plastic to produce 15,000 dive masks. calculate washington's direct materials price variance for the mont

Answer 1

$400 unfavorable variance

Step-by-step explanation:

The standard price of plastic is $1.60 per pound, and if we multiply that by 4,000 pounds purchased = $6,400. But instead of paying $6,400, the company paid $6,800 for the plastic. That means that there was an variance in direct materials of = $6,400 - $6,800 = -$400, since the result is negative, the variance is unfavorable.

An unfavorable variance results from spending money than budgeted to produce the same amount of goods.