A company reports the following for one of its products. 

 

Compute the direct materials price and quantity variances and identify each as favorable or unfavorable.

Direct materials standard (3 pounds @ $2 per pound) Actual direct materials used (AQ) Actual units produced Actual cost of direct materials used AQ=Actual Quantity SQ=Standard Quantity AP = Actual Price SP = Standard Price $6 per unit 310,000 pounds 70,000 units $ 527,000