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.

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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