Answer:
Materials Cost Variance = 6500 favorable
Explanation:
Frogue Corporation
AP= Actual price per kilogram $2.50
AQ= Actual kilograms of material used 31,000
SP = Standard price per kilogram $2.80
SQ= Standard kilograms per completed unit 6 kilograms = 5000 units *6 kg= 30,000 kg
Material Price Variance =( AP -SP)(AQ)=
= ( $2.50- $2.80)31,000 = 9300 Favorable
It is favorable because the standard price is higher than the actual price.
Material Quantity Variance =( AQ -SQ)(AP)= (31000- 30,000) 2.8
= 1000*2.8= 2800 unfavorable
It is unfavorable because the standard quantity is lower than the actual quantity.
Materials Cost Variance =Material Price Variance+Material Quantity Variance
=9300 Favorable+2800 unfavorable=
Materials Cost Variance = 6500 favorable
When favorable and unfavorable are added the unfavorable is with negative sign so they are subtracted.
