The Southside Corporation budgeted 4,400 pounds of direct materials to make 2,600 units of product. The company actually used 4,800 pounds of direct materials to make the 2,600 units. The direct materials quantity variance is $1,500 unfavorable. What is the Standard Price (SP) per pound of direct materials?

$3.75

Explanation:

As we already know that

Direct materials quantity variance = (Budged pounds of direct material  - Actual pounds of direct material) × Standard rate

$1,500 unfavorable  = (4,400 pounds - 4,800 pounds) × Standard rate

$1,500 unfavorable  = 400 × Standard rate

So, standard rate is

= $1,500 ÷ $400

= $3.75

We simply applied the above formula

$3.75

Explanation:

The computation of the Standard Price per pound of direct materials is given below:-

Direct materials quantity variance = (Standard quantity allowed for actual production - Actual quantity) × Standard rate

= $1,500 U = (4400 - 4800) × Standard rate

= $1500 U = 400 × Standard rate

= Standard rate = $3.75

Therefore for computing the Direct materials quantity variance we simply applied the above formula.

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