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Bridgeware Company has a materials price standard of $2.50 per kilogram.Four thousand kilograms of materials were purchased at $2.40 a kilogram.The actual quantity of materials used was 3,500 kilograms, although the standard quantity allowed for the output was 3,400 kilograms.
-Bridgeware Company's materials price variance is
A)$400 U.
B)$400 F.
C)$350 U.
D)$300 F.

Question

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Bridgeware Company has a materials price standard of $2.50 per kilogram.Four thousand kilograms of materials were purchased at $2.40 a kilogram.The actual quantity of materials used was 3,500 kilograms, although the standard quantity allowed for the output was 3,400 kilograms.
-Bridgeware Company's materials price variance is
A)$400 U.
B)$400 F.
C)$350 U.
D)$300 F.

Quizplus · Accepted Answer

Materials price variance = (actual price - standard price) × actual quantity purchased
= ($2.40 - $2.50) × 4,000
= $400 F (favorable because the actual price is lower than the standard price)

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