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Quan Enterprises purchased and consumed 56,000 gallons of direct material that was used in the production of 15,000 finished units of product. According to engineering specifications, each finished unit had a manufacturing standard of four gallons. If a review of Quan's accounting records at the end of the period disclosed a material price variance of $5,600U and a material quantity variance of $2,800F, what is the actual price paid for a gallon of direct material

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Tundexi

Answer:

Total Direct Materials Cost Variance = Direct Material Price Variance + Direct Material Quantity Variance

Total Direct Materials Cost Variance = $5,600U + (-$2,800F)

Total Direct Materials cost Variance = $2,800 Unfavorable

Direct Material cost Variance = (Actual rate * Actual quantity) - (Standard Rate * Standard Quantity)

$2,800 U = (AR*56000) - (SR * (15,000*5)

$2,800 U = (AR*56000) - (SR * 75000)

We need Standard Price per Gallon to calculate the actual price paid for a gallon of direct material. But, we have no information about it.