Question

The following materials standards have been established for a particular product: Standard quantity per unit of output 5.2 meters Standard price $ 18.00 per meter The following data pertain to operations concerning the product for the last month: Actual materials purchased 8,100 meters Actual cost of materials purchased $ 151,065 Actual materials used in production 7,700 meters Actual output 1,450 units What is the materials price variance for the month?

Answer 1

Answer:

The materials price variance for the month is $5,265 favorable

Explanation:

The material price variance is computed by taking a difference between the actual price - standard price and multiply with actual quantity.

In the given question, the actual price is not given. So, we need to calculate the actual price by using the formula which is shown below:

= Actual cost of material purchased ÷ Actual materials purchased

= 151,065 ÷  8,100 meters

=$18.65 per meters

Now, we can easily calculate. The equation is shown below:

= (Actual Price - Standard Price) × Actual Quantity

= ($18.65 - $18.00) × 8,100

= $5,265 favorable.

Thus, the materials price variance for the month is $5,265 favorable.