Asked by Willis Sands on Jul 25, 2024
Verified
What is the materials price variance for the month?
A) $4,060 U.
B) $3,640 U.
C) $3,640 F.
D) $4,060 F.
Materials Price Variance
The difference between the actual cost of materials purchased and the expected (or standard) cost, multiplied by the quantity of materials purchased.
Standard Quantity
The expected amount of materials or inputs required to produce a single unit of product under normal conditions.
Actual Materials Purchased
The total quantity and cost of raw materials bought by a company for production during a specific period.
- Evaluate differences in material and labor costs, covering price, quantity, rate, and efficiency deviations.
Verified Answer
EZ
Enzio ZunigaJul 26, 2024
Final Answer :
A
Explanation :
The materials price variance is calculated as (Actual Price - Standard Price) * Actual Quantity Purchased. The actual price per gram can be found by dividing the total cost of materials purchased by the quantity of materials purchased: $108,460 / 5,800 grams = $18.70 per gram. The standard price is $18.00 per gram. Thus, the materials price variance is ($18.70 - $18.00) * 5,800 grams = $0.70 * 5,800 = $4,060 Unfavorable, because the actual price is higher than the standard price.
Learning Objectives
- Evaluate differences in material and labor costs, covering price, quantity, rate, and efficiency deviations.