Answer:
The difference between the standard and actual price paid for the materials is $0.5.
Explanation:
Given Data:
Actual Quantity = 12,000 Pounds
Material Price Variance = $6,000
We know the formula for Material Price Variance is:
Materials Price Variance = <em>(Actual quantity × Actual price)</em> – <em>(Actual quantity × Standard price) ----- (1)</em>
For convenience, suppose:
Actual Price = AP & Standard Price = SP
Rearranging the equation (1) and substituting the Actual and standard price with AP and SP we get,
Material Price Variance = (Actual Quantity x AP) – (Actual Quantity x SP)
Taking Actual Quantity as common on the left hand side of equation we get:
Material Price Variance= Actual Quantity (AP – SP) ---- (2)
Putting the values of Material Variance and Actual Quantity in equation (2), we get:
$6000=12,000 (AP – SP)
Rearranging the equation we get,
AP – SP = $6000/12,000
Finally, AP – SP = $0.5
Conclusion:
The difference between the standard and actual price paid for the materials is $0.5.
