The Armstrong Corporation developed a flexible budget for its production process. Armstrong budgeted to use 12,000 pounds of direct material with a standard cost of $ 11 per pound to produce 10,000 units of finished product. Armstrong actually purchased 18,000 pounds and used 13,000 pounds of direct material with a cost of $24 per pound to produce 10,000 units of finished product. Given these​ results, what is​ Armstrong's direct material price​variance?
A. $234,000 unfavorable
B. $156,000 unfavorable
C. $234,000 favorable
D. $156,000 favorable

Respuesta :

Answer:

A. $234,000 unfavorable

Explanation:

The direct materials Price variance will be calculated considering the purchased amount.

[tex](standard\:cost-actual\:cost) \times actual \: quantity= DM \: price \: variance[/tex]

std cost  $11.00

actual cost  $24.00

quantity 18,000

difference  $(13.00)

[tex](11 - 24) \times 18,000 = DM \: price \: variance[/tex]

price variance  $(234,000.00)