If the budgeted cost for direct materials is $50,000 and the actual cost is $55,

₹0.0

Question: If the budgeted cost for direct materials is $50,000 and the actual cost is $55,000, what is the direct materials price variance?

Options:

Correct Answer: $5,000 Unfavorable

Solution:

Direct materials price variance = Actual Cost - Budgeted Cost = $55,000 - $50,000 = $5,000 Unfavorable.

If the budgeted cost for direct materials is $50,000 and the actual cost is $55,000, what is the direct materials price variance?

If the budgeted cost for direct materials is $50,000 and the actual cost is $55,000, what is the direct materials price variance?

Step 1: Identify the budgeted cost for direct materials, which is $50,000.
Step 2: Identify the actual cost for direct materials, which is $55,000.
Step 3: Calculate the direct materials price variance by subtracting the budgeted cost from the actual cost.
Step 4: Perform the calculation: $55,000 (actual cost) - $50,000 (budgeted cost) = $5,000.
Step 5: Determine if the variance is favorable or unfavorable. Since the actual cost is higher than the budgeted cost, the variance is unfavorable.

Direct Materials Price Variance – The difference between the actual cost of direct materials and the budgeted cost, indicating whether the cost was higher or lower than expected.