Question
BagitUP Company manufactures paper bags. Consider the following selected data: Direct Materials Direct Labor Standards per Paper Bag 500 grams of input at $0.01 per
BagitUP Company manufactures paper bags. Consider the following selected data: Direct Materials Direct Labor Standards per Paper Bag 500 grams of input at $0.01 per gram 0.05 labor hours at $23 per labor hour Actual Performance: Paper Bags Produced and Sold 17,000 bags Direct Materials Purchased and Used 8,130,000 grams Labor Hours Used 1,500 labor hours Total Direct Materials Costs $170,000 Total Direct Labor Costs $45,200 Required a) Calculate price variance for direct materials. b) Provide a possible reason for the favorable or unfavorable price variance for direct materials.
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