Aztec Bromac budgeted the following cost standards for the current year: Direct materials = 2.8 kilos per unit @ $3.00 per kilo
Direct labour = 1.5 hours per unit @ $6 per hour
Actual production and costs were as follows:
Units produced = 3,600
Direct materials used = 9,000 kg.
Direct materials purchased = 10,000 kg. @ a cost of $29,000
Direct labour incurred = 4,000 hours at a cost of $26,000
The material price variance for materials purchased was :
A) $1,000 F
B) $1,000 U
C) $2,000 F
D) $2,000 U

Question

Quizplus · Accepted Answer

The material price variance is calculated as (Actual Price - Standard Price) x Actual Quantity Purchased. The actual price per kilo is $29,000 / 10,000 kg = $2.90. The standard price is $3.00. The variance is ($2.90 - $3.00) x 10,000 kg = $1,000 F (favorable).

Aztec Bromac Budgeted the Following Cost Standards for the Current