The following information pertains to the costs and usage of leather for the upholstery of a desk chair:
Standard Quantity: 12 sq. ft.
Standard Price: $1.60 per sq. ft.
Actual Quantity: 9 sq. ft
Actual Price: $1.60 per sq. ft
Which of the follow statements are true about the variance?
A) The price variance is 3
B) The usage variance is 0
C) The total variance is -$4.80
D) The Price variance is $4.80
E) None of the above is true

Question

Quizplus · Accepted Answer

The total variance is the sum of the price variance and the usage variance. The price variance is calculated as (Actual Price - Standard Price) * Actual Quantity = ($1.60 - $1.60) * 9 sq. ft. = $0. The usage variance is calculated as (Actual Quantity - Standard Quantity) * Standard Price = (9 sq. ft. - 12 sq. ft.) * $1.60 = -$4.80. Therefore, the total variance is $0 + -$4.80 = -$4.80.

The Following Information Pertains to the Costs and Usage of Leather