Question

Johnsonville Company recently purchased 33,000 gallons of direct material at $5.90 per gallon. Usage by the end of the period amounted to 31,000 gallons. If the standard cost is $6.70 per gallon and the company believes in computing variances at the earliest point possible, the direct-material price variance would be calculated as:

Answer 1

$24,800 Favourable

Step-by-step explanation:

direct-material price variance = Aq×Ap-Aq×Sp

=(31,000×$5.90)-(31,000×$6.70)

= $24,800 Favourable

Johnsonville Company used materials at a price that is lower than anticipated