Lavoie Company planned to use 18500 pounds of material costi

Lavoie Company planned to use 18,500 pounds of material costing $2.50 per pound to make 4,000 units of its product. In actually making 4,000 units, the company used 18,800 pounds that cost $2.54 per pound. Calculate the direct materials price variance.

Solution

standard cost = 2.50*18500

= 46250

actual cost = 2.54*1880

= 47752

now direct price material variance = actual cost - stadard cost

= 47752- 46250

= 1502