Throop Company's standards call for one kilogram of materials for each unit of output at a cost of £2 per kilogram for the raw materials. Actual output was 50,000 units of product requiring 45,000 kilograms of raw materials at a cost of £2.10 per kilogram. There were no beginning or ending inventories of raw materials. The direct material price variance and quantity variance were:
$\begin{array}{ll}
&&&&\text { Price } &&&&&& \text { Quantity } \\end{array}$
A.$\begin{array}{ll}\text { £ 4,500 unfavourable } & £ 10,000 \text { favourable } \\end{array}$
B.$\begin{array}{ll}\text { £ 5,000 favourable } && £ 10,500 \text { unfavourable } \\end{array}$
C.$\begin{array}{ll}\text { £ 5,000 unfavourable } & £ 10,500 \text {favourable } \\end{array}$
D.$\begin{array}{ll}\text { £10,000 favourable } && £ 4,500 \text { unfavourable }
\end{array}$
A)Option A
B)Option B
C)Option C
D)Option D

Question

Quizplus · Accepted Answer

The direct material price variance is calculated as (Actual Price - Standard Price) x Actual Quantity = (£2.10 - £2.00) x 45,000 = £4,500 unfavourable. The quantity variance is calculated as (Standard Price) x (Actual Quantity - Standard Quantity) = £2.00 x (45,000 - 50,000) = £10,000 favourable.

Throop Company's Standards Call for One Kilogram of Materials for Each