The following material budgets have been developed for the Criders Company. $\begin{array}{ll}
\text { Price per pound } & \$ 6.50 \
\text { Pounds per unit } & 1 \
\text { Purchase price variance } & \$ 3,200 \text { unfavorable }
\end{array}$ If the company purchased 16,000 units, the actual price per pound of material purchased must have been:
A)$6.70
B)$5.00
C)$6.30
D)$5.80

Question

Quizplus · Accepted Answer

The purchase price variance formula is: (Actual Price - Standard Price) x Actual Quantity. Given the variance is $3,200 unfavorable and the standard price is $6.50, we can set up the equation: (Actual Price - $6.50) x 16,000 = $3,200. Solving for the Actual Price gives us $6.70.

The Following Material Budgets Have Been Developed for the Criders