THE FOLLOWING INFORMATION IS USED FOR QUESTIONS 1 8.

Test Company uses a standard costing system. The company developed the following standard cost sheet for one of its products.

Direct materials	(6 lbs. @ $5 per lb.)	$30
Direct labor	(1.5 hours @ $10 per hour)	15
Variable overhead	(1.5 hours @ $4 per hour)	6
Fixed overhead	(1.5 hours @ $2 per hour assuming 17,000 hours)	3

During the year, Test Company recorded the following actual results.

Units produced		12,000
Direct materials	(71,750 lbs. purchased and used)	$365,925
Direct labor	(17,900 hours)	182,580
Variable overhead		69,000
Fixed overhead		33,000

Determine the direct materials price variance.

		$5,925 favorable
		$7,175 unfavorable
		$7,175 favorable
		$5,925 unfavorable