Question

Jackson Industries uses a standard cost system in which direct materials inventory is carried at standard cost. Jackson has established the following standards for one unit of product: Standard Quantity or Hours Standard Price or Rate Standard Cost Per Unit Direct materials 3 pounds $5.30 per pound $15.90 Direct labor 2.90 hours $10.00 per hour $29.00 During May, Jackson purchased 96,300 pounds of direct material at a total cost of $529,650. The total factory wages for May were $754,500, 90 percent of which were for direct labor. Jackson manufactured 26,000 units of product during May using 74,300 pounds of direct material and 75,900 direct labor-hours. The price variance for the direct material acquired by Jackson Industries during May is: $15,860 Favorable $15,860 Unfavorable $22,260 Favorable $19,260 Unfavorable

Answer 1

Correct answer---$19,260 Unfavorable.

Working

Standard DATA for		26000	Units
	Quantity (SQ)	Rate (SR)	Standard Cost
	[A]	[B]	[A x B]
Direct Material	( 3 Pounds x 26000 Units)=78000 Pounds	$      5.30	$    4,13,400.00

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity
(	$ 5.30	-	$ 5.50	)	x	96300
	-19260
	Variance		$            19,260.00			Unfavourable-U