Question

Sanchez Company's output for the current period was assigned a $450,000 standard direct materials cost. The...

Sanchez Company's output for the current period was assigned a $450,000 standard direct materials cost. The direct materials variances included a $11,250 favorable price variance and a $6,750 unfavorable quantity variance. What is the actual total direct materials cost for the current period?

Multiple Choice

  • $468,000.

  • $461,250.

  • $432,000.

  • $454,500.

  • $445,500.

Business   Accounting   
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Answer #1

Answer:

Calculation of actual total direct material cost for the period:

Standard total direct material cost = $450,000

Direct material price variance = $11,250 Favorable

Direct material quantity variance = $6,750 Unfavorable

Now,

Total direct material cost variance = Direct material price variance + Direct material quantity variance

  = $11,250 + ($6,750)

  = $4,500 Favorable

Therefore,

Total direct material cost variance = Standard total direct material cost - Actual total direct material cost

$4,500 = $450,000 -  Actual total direct material cost

Actual total direct material cost = $445,500

Accordingly, Option (e) i.e. $445,500 is the correct answer as Actual direct material cost is $445,500.

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