A company uses 20,000 pounds of materials for which it paid $6.00 a pound. The materials price variance was $30,000 unfavorable. What is the standard price per pound?
A) $1.50
B) $4.50
C) $6.00
D) $7.50

Question

Quizplus · Accepted Answer

The materials price variance is calculated as (Actual price - Standard price) * Actual quantity. Since the variance is unfavorable, the actual price must be higher than the standard price. Therefore, the standard price must be lower than $6.00. The only choice that is lower than $6.00 is $4.50.

A Company Uses 20,000 Pounds of Materials for Which It