Perkins Company, which has a standard cost system, had 500 pounds of raw material X in its inventory at June 1, purchased in May for £1.20 per pound and carried at a standard cost of £1.00 per pound. The following information pertains to raw material X for the month of June:$\begin{array}{ll}
\text { Actual pounds purchased } & 1,400 \
\text { Actual pounds used } & 1,500 \
\text { Standard pounds allowed for actual production } & 1,300 \
\text { Standard cost per pound } & £ 1.00 \
\text { Actual cost per pound } & £ 1.10
\end{array}$
The unfavourable materials purchase price variance for raw material X for June was

A)£ 0.
B)£130.
C)£140.
D)£150.

Question

Perkins Company, which has a standard cost system, had 500 pounds of raw material X in its inventory at June 1, purchased in May for £1.20 per pound and carried at a standard cost of £1.00 per pound. The following information pertains to raw material X for the month of June:$\begin{array}{ll}
\text { Actual pounds purchased } & 1,400 \
\text { Actual pounds used } & 1,500 \
\text { Standard pounds allowed for actual production } & 1,300 \
\text { Standard cost per pound } & £ 1.00 \
\text { Actual cost per pound } & £ 1.10
\end{array}$
The unfavourable materials purchase price variance for raw material X for June was

A)£ 0.
B)£130.
C)£140.
D)£150.

Quizplus · Accepted Answer

The unfavourable materials purchase price variance is calculated as follows:Unfavourable materials purchase price variance = (Actual price - Standard price) * Actual quantity purchased= (£1.10 - £1.00) * 1,400 pounds= £0.10 * 1,400 pounds= £140

Perkins Company, Which Has a Standard Cost System, Had 500