All Urban Company produces a product requiring 4 pounds of material costing $3.50 per pound. During December All Urban purchased 4200 pounds of material for $14112 and used the material to produce 500 products. What was the materials price variance for December?
A) $560 F
B) $588 F
C) $112 U
D) $672 U

Question

Quizplus · Accepted Answer

The materials price variance is calculated as (Actual Price - Standard Price) x Actual Quantity. The standard price is $3.50 per pound, and the actual price can be found by dividing the total cost of materials purchased ($14112) by the quantity purchased (4200 pounds), which equals $3.36 per pound. The variance is then ($3.36 - $3.50) x 4200 = -$0.14 x 4200 = -$588, indicating a $588 favorable variance since the actual price per pound is less than the standard price.

All Urban Company Produces a Product Requiring 4 Pounds of Material