MC Qu. 93 A company has established... A company has established 5 pounds of Material J at $3 per pound as the standard for the material in its Product Z. The company has just produced 1,500 units of this product, using 7,700 pounds of Material J that cost $21,780.The direct materials price variance is:

$255 Favorable

Explanation:

Direct material price variance = (Actual price - Budgeted price) * Actual quantity

Direct material price variance = ($21,780/7,700 - $3) * 7,700

Direct material price variance = ($2.83 - $3) * 1,500

Direct material price variance = $0.17 * 1,500

Direct material price variance = $255 Favorable