Bailey Corporation manufactures orange safety suits for road workers. The following information relates to the corporation's purchases and use of material for April: The company's materials price variance for April was $3,000 Favorable. Its materials quantity variance for April was $5,000 Favorable. What does the company use as a standard price per yard of material for its safety suits?

Question

Bailey Corporation manufactures orange safety suits for road workers. The following information relates to the corporation's purchases and use of material for April:  The company's materials price variance for April was $3,000 Favorable. Its materials quantity variance for April was $5,000 Favorable. What does the company use as a standard price per yard of material for its safety suits?

Quizplus · Accepted Answer

Materials quantity variance = (AQ - SQ) × SP
$5,000 F = (10,000 yards - 10,800 yards) × SP
-$5,000 = (10,000 yards - 10,800 yards) × SP
-$5,000 = (-800 yards) × SP
SP = $5,000 ÷ 800 yards = $6.25 per yard

Bailey Corporation Manufactures Orange Safety Suits for Road Workers