Question

Alpha Company manufactures Product P and sells it in packs of 10 units. The actual results for the first week in January are as follows: Actual production 25,000 packs of Product P Actual cost of raw material Q 95,500 units at $0.85 Actual cost of labor 500 hours at $6.25 Standard quantity of raw material 96,000 units for 25,000 units of Product P Standard price of raw material Q $0.77 Calculate the total material variance for Product P for the first week in January

Answer 1

Answer:$67500$

The right solution is "13,675 U".

Explanation:

According to the question,

The standard material cost will be:

= $25000\times (\frac{90000}{30000} )\times 0.90$

= $25000\times 30000\times 0.90$

= $67,500$

The actual material cost will be:

= $95500\times 0.85$

= $81,175$

hence,

The total material price variance will be:

= $Actual \ cost - Standard \ cost$

= $81175-67500$

= $$13,675$ (Unfavorable)