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A company has a budgeted direct material cost of $30,000 but incurs $32,000. Wha
A company has a budgeted direct material cost of $30,000 but incurs $32,000. What is the direct material variance?
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Q1
A company has a budgeted direct material cost of $30,000 but incurs $32,000. What is the direct material variance?
$2,000 Favorable
$2,000 Unfavorable
$1,000 Favorable
$1,000 Unfavorable
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Direct Material Variance = Actual Cost - Budgeted Cost = $32,000 - $30,000 = $2,000 Unfavorable.
Questions & Step-by-step Solutions
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Q
Q: A company has a budgeted direct material cost of $30,000 but incurs $32,000. What is the direct material variance?
Solution:
Direct Material Variance = Actual Cost - Budgeted Cost = $32,000 - $30,000 = $2,000 Unfavorable.
Steps: 5
Show Steps
Step 1: Identify the budgeted direct material cost, which is $30,000.
Step 2: Identify the actual direct material cost incurred, which is $32,000.
Step 3: Calculate the direct material variance by subtracting the budgeted cost from the actual cost: $32,000 - $30,000.
Step 4: Determine the result of the calculation, which is $2,000.
Step 5: Since the actual cost is higher than the budgeted cost, label the variance as 'Unfavorable'.
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