Actual costs of $63,000 are less than flexible budget costs of $66,000, so the materials price variance is $3,000 favorable. The variance can also be thought of on a price per unit basis. The actual costs of $63,000 were for 60,000 feet of direct material, so the actual price per foot is $1.05 ($63,000 ÷ 60,000). The original budget was for a direct materials cost of $1.10 per foot, so it was expected that 60,000 feet of material would cost $66,000. The direct materials actually cost less than budget by $0.05 per foot ($1.10 budget versus $1.05 actual), so the variance is favorable. The direct materials quantity variance of $165 unfavorable means this company used more direct materials than planned because flexible budget costs of $66,000 are higher than the standard costs of $65,825. To produce 13,300 sets of bases, the company expected a cost of $4.95 per set (4.5 feet of
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