Reference: 11-07
The following materials standards have been established for a particular product:
Standard quantity per unit of output: 4.4 grams
Standard price: $13.20 per gram
The following data pertain to operations concerning the product for the last month: Actual materials purchased: 4,800 grams
Actual cost of materials purchased: $62,880
Actual materials used in production: 4,300 grams
Actual output: 700 units
-What is the materials price variance for the month?
A)$480 F.
B)$430 F.
C)$480 U.
D)$430 U.

Question

Quizplus · Accepted Answer

Materials price variance is calculated as (Actual Price - Standard Price) * Actual Quantity Purchased. The standard price is $13.20 per gram, and the actual cost of materials purchased is $62,880 for 4,800 grams, resulting in an actual price of $62,880 / 4,800 = $13.10 per gram. The variance is ($13.10 - $13.20) * 4,800 = -$0.10 * 4,800 = -$480, indicating a $480 favorable variance since the actual price is less than the standard price.

Reference: 11-07 The Following Materials Standards Have Been Established for a Particular