Keller Company has a materials price standard of $2.00 per pound. Five thousand pounds of materials were purchased at $2.20 a pound. The actual quantity of materials used was 5,000 pounds, although the standard quantity allowed for the output was 4,500 pounds.
Keller Company's materials price variance is
A) $100 U.
B) $1,000 U.
C) $900 U.
D) $1,000 F.

Question

Quizplus · Accepted Answer

The materials price variance is calculated as (Actual Price - Standard Price) x Actual Quantity. Here, it is ($2.20 - $2.00) x 5,000 = $1,000 Unfavorable (U).

Keller Company Has a Materials Price Standard of $2