Question

Matt Company uses a standard cost system. Information for raw materials for Product RBI for the month of October follows: Standard price per pound of raw materials $1.60 Actual purchase price per pound of raw materials $1.55 Actual quantity of raw materials purchased 2,000 pounds Actual quantity of raw materials used 1,900 pounds Standard quantity allowed for actual production 1,800 pounds What is the materials purchase price variance?

Answer 1

Answer:

$100 favorable

Explanation:

The computation of the material purchase price variance is shown below:

= Actual Quantity purchased × (Standard Price - Actual Price)

= 2,000 pounds × ($1.60 - $1.55)

=  2,000 pounds × $0.05

= $100 favorable

Simply we took the difference between the standard and the actual price, and then multiply it by the actual quantity purchased