Question

The following materials standards have been established for a particular product: Standard quantity per unit of output 4.5 meters Standard price $17.40 per meter The following data pertain to operations concerning the product for the last month: Actual materials purchased 7,000 meters Actual cost of materials purchased $124,250 Actual materials used in production 6,500 meters Actual output 1,420 units What is the materials price variance for the month?

Answer 1

Answer:

$2,450 Unfavorable

Explanation:

The computation of material price variance is shown below:-

Material price variance = ( Standard Price - Actual Price ) × Actual Quantity of materials purchased

= $17.40 - ($124,250 ÷ 7000) × 7,000

= ($17.40 - $17.75) × 7000

= $2,450 Unfavorable

Therefore for computing the material price variance we simply applied the above formula.