Asked by William Russell on Apr 24, 2024

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Gipple Corporation makes a product that uses a material with the quantity standard of 7.3 grams per unit of output and the price standard of $6.00 per gram. In January the company produced 3,400 units using 24,870 grams of the direct material. During the month the company purchased 27,400 grams of the direct material at $6.10 per gram. The direct materials purchases variance is computed when the materials are purchased.The materials price variance for January is:

A) $2,482 Favorable
B) $2,740 Unfavorable
C) $2,482 Unfavorable
D) $2,740 Favorable

Materials Price Variance

The difference between the actual cost of materials purchased and the expected (standard) cost, indicating how material cost fluctuations affect production costs.

Quantity Standard

The expected or budgeted quantity regarding inputs or outputs, used as a performance measure or pricing basis.

Price Standard

A predetermined cost that represents what should be paid for a unit of input, such as materials or labor.

  • Calculate and analyze direct material variances, including price and quantity variances.
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Verified Answer

FG
Flavio Gonzalez5 days ago
Final Answer :
B
Explanation :
To calculate the materials price variance, we need to compare the actual price paid for the direct material with the standard price.

Standard price per gram = $6.00
Actual price per gram = $6.10

Quantity of direct material purchased = 27,400 grams

Materials price variance = (Actual price - Standard price) x Quantity
= ($6.10 - $6.00) x 27,400
= $2,740 Unfavorable

Therefore, the answer is B.