Electric Zero produces relay units for generators.Each relay has a standard material cost of $67.Standards call for two relays per generator.In July, the company purchased 120 relays for $7,560.The company used 104 relays in the production of 50 generators, with 4 relays damaged in the installation process.The standard quantity of labor is 20 hours per generator, with a standard wage rate of $23.The company incurred 1,020 labor hours at a cost of $22,950.How much is the material price variance?
A)$480 favorable
B)$268 unfavorable
C)$1,340 unfavorable
D)$592 unfavorable

Question

Quizplus · Accepted Answer

The material price variance is calculated as (Actual Price - Standard Price) x Actual Quantity. The actual price per relay is $7,560 / 120 = $63. The standard price is $67. The variance is ($63 - $67) x 120 = $480 favorable.

Electric Zero Produces Relay Units for Generators