Standard DM price per pound (Lbs): $20 Standard DM needed per unit: 2 Lbs Standard DL rate: $15 per hour Standard DL hours per unit: 2 hours of Direct Labor per unit *The actual DM used for 11000 units of production is 24200 Ibs which means: 24200 lbs / 11000 actual units produced = 2.2 Ibs actual quantity of DM used per unit Actual DL hours: 20000 hours Variable Overhead Rate applied based on per DL hour: $10 *Note: I am helping you here! . AQ (AP-SP) = DM Price Variance . (AQ x AP) - (AQ x SP) = -42000 Favorable (less spending for DM) . $442,000 - (24200 x $20) = DM Price Variance . 442,000 - 484,000 = DM Price Variance . $42,000 Favorable DM Price Variance