Thomas Company uses a standard cost system and recognizes the materials purchase price variance at the time materials are purchased. Information for raw materials for Product RBI for the month of October follows: What is the materials purchase price variance?

Question

Thomas Company uses a standard cost system and recognizes the materials purchase price variance at the time materials are purchased. Information for raw materials for Product RBI for the month of October follows:  What is the materials purchase price variance?

Quizplus · Accepted Answer

Materials purchase price variance = (actual unit price of materials - standard unit price of materials) x actual quantity of materials purchased
Materials purchase price variance = ($1.65 - $1.75) x 4,000
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Thomas Company Uses a Standard Cost System and Recognizes the Materials