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?
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
Total direct material cost variance = Direct material price variance + Direct material quantity variance
= $11,250 + ($6,750)
= $4,500 Favorable
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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