Hushovd iron works has collected the following data for its thunderbolt line of products: direct materials standard 10 pounds per unit direct materials standard cost $0.75 per pound actual material purchased cost $0.85 per pound actual direct materials purchased 40,000 pounds actual quantity of direct materials used 35,000 pounds actual finished goods produced 4,500 unitswhat is the direct material price variance? a) $4,000 favorableb) $4,000 unfavorablec) $3,500 favorabled) $3,500 unfavorable

The correct answer is D: $3500 unfavorable

Explanation:

Giving the following information:

Standard:

Direct materials standard 10 pounds per unit

Direct materials standard cost $0.75 per pound

Actual:

Material purchased cost $0.85 per pound

Direct materials purchased 40,000 pounds

Direct materials used 35,000 pounds

Finished goods produced 4,500 units

Direct material price variance= (SP-AP)*AQ

SP= standard price

AP= actual price

AQ= standard quantity

Direct material price variance= (0.75-0.85)*35000

Direct material price variance= $3500 unfavorable

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