LRF, Inc. produces a product requiring 4 pounds of material costing $2.50 per pound. During December, LRF purchased 4,200 pounds of material for $10,080 and used the material to produce 500 products. What was the materials price variance for December?

Question

Quizplus · Accepted Answer

The materials price variance is calculated as (Actual Price - Standard Price) x Actual Quantity. The standard price is $2.50 per pound, and the actual price is $10,080 / 4,200 pounds = $2.40 per pound. The variance is ($2.40 - $2.50) x 4,200 = $420 F (favorable).

LRF, Inc Produces a Product Requiring 4 Pounds of Material Costing