Denmark Corporation's variance report for the purchasing department reports 1000 units of material A purchased and 2400 units of material B purchased. It also reports standard prices of $2 for Material A and $3 for Material B. Actual prices reported are $2.10 for Material A and $2.80 for Material B. Denmark should report a total price variance of
A) $380 F.
B) $340 F.
C) $340 U.
D) $380 U.

Question

Quizplus · Accepted Answer

The total price variance is calculated by comparing the actual cost to the standard cost for the actual quantity of materials purchased. For Material A: (Actual Price - Standard Price) * Actual Quantity = ($2.10 - $2.00) * 1000 = $100 U. For Material B: (Actual Price - Standard Price) * Actual Quantity = ($2.80 - $3.00) * 2400 = $480 F. The total price variance is $480 F - $100 U = $380 F.

Denmark Corporation's Variance Report for the Purchasing Department Reports 1000