Hoode and Lowe Limited's materials budget for August 20X3 comprised 6 metres of raw material at a standard cost of £2.30 per metre for each unit produced and sold.Actual sales and production for the month was 680 units.The outturn was that 6.20 metres of raw material were used for each unit at a cost of £2.40 per metre. What was the materials price variance for August 20X3?

Question

Quizplus · Accepted Answer

The materials price variance is calculated as (Actual Price - Standard Price) x Actual Quantity. The actual quantity used is 6.20 metres per unit for 680 units, which equals 4216 metres. The variance is (2.40 - 2.30) x 4216 = £421.60. Since the actual price is higher than the standard, it's an adverse variance.

Hoode and Lowe Limited's Materials Budget for August 20X3 Comprised