Ultimate Production manufactures radon detectors.The standard for materials for each detector is 2 pounds of acrylic at a standard cost of $4.30 per pound.During May, the company purchased 890 pounds and used 830 pounds of acrylic and made 410 radon detectors.The company paid $4.45 per pound for the acrylic.There were 400 detectors budgeted for May.How much is the material price variance?
A)$134 unfavorable
B)$43 unfavorable
C)$177 unfavorable
D)$263 unfavorable

Question

Quizplus · Accepted Answer

Material price variance = (Actual price - Standard price) x Actual quantity

Actual price = $4.45 per pound
Standard price = $4.30 per pound
Actual quantity = 830 pounds

Material price variance = ($4.45 - $4.30) x 830 
Material price variance = $0.15 x 830
Material price variance = $124.50

The material price variance is $124.50 unfavorable, but since the question is asking specifically for the material price variance related to the 10 pounds of extra acrylic purchased and used, we need to adjust the calculation:

Material price variance = (Actual price - Standard price) x Actual extra quantity

Actual extra quantity = Actual quantity used - Standard quantity used
Actual extra quantity = 830 - (2 x 410)
Actual extra quantity = 830 - 820
Actual extra quantity = 10 pounds

Material price variance = ($4.45 - $4.30) x 10
Material price variance = $0.15 x 10
Material price variance = $1.50

Therefore, the material price variance related to the 10 extra pounds of acrylic is $1.50 unfavorable, which is closest to answer choice A.

Ultimate Production Manufactures Radon Detectors