A company uses 8,400 pounds of materials and exceeds the standard by 400 pounds. The quantity variance is $1,800 unfavorable. What is the standard price?
A) $1.50
B) $3.00
C) $4.50
D) Cannot be determined from the data provided.

Question

Quizplus · Accepted Answer

Quantity Variance = (Actual Quantity - Standard Quantity) x Standard Price
$1,800 = (8,800 - Standard Quantity) x Standard Price
We know that Actual Quantity = Standard Quantity + Excess Quantity
8,400 + 400 = Standard Quantity + Excess Quantity
8,800 = Standard Quantity + 400
Standard Quantity = 8,400
Substitute this value in the quantity variance equation:
$1,800 = (8,800 - 8,400) x Standard Price
$1,800 = 400 x Standard Price
Standard Price = $4.50

A Company Uses 8,400 Pounds of Materials and Exceeds the Standard