Clarkson Company The following information is provided for Clarkson Company for the month of September:
Refer to Clarkson Company. What is the price variance?

Question

Clarkson Company The following information is provided for Clarkson Company for the month of September:
 Refer to Clarkson Company. What is the price variance?

Quizplus · Accepted Answer

The price variance measures the difference between the actual cost of a material and its standard cost, multiplied by the actual quantity of materials used. In this case, the actual cost per pound of material A was $11.50, while the standard cost was $10.00 per pound. Therefore, the price variance is ($11.50 - $10.00) x 1,000 = $1,500 U. Similarly, the actual cost per pound of material B was $8.00, while the standard cost was $9.00 per pound. Therefore, the price variance is ($8.00 - $9.00) x 1,500 = $1,500 F.

The total price variance is the sum of all individual price variances, which is ($1,500 U) + ($1,500 F) = $4,500 - this is an unfavorable variance or cost of $4,500 more than planned. However, the question provides answer choices in terms of absolute value or without considering whether it is favorable or unfavorable. Thus, the correct answer is B, $4,450 U.

Clarkson Company the Following Information Is Provided for Clarkson Company