Wengeli and Hudson Limited's materials budget for February 20X3 comprised 2.5 kg of raw material at a standard cost of £10.50 per kg for each unit produced and sold.The sales and production budget was for 880 units.Actual sales and production for the month was 890 units.The actual price paid for raw materials was £10.40 and 2.4 kg were used in the manufacture of each unit. What was the materials price variance for February 20X3?

Question

Quizplus · Accepted Answer

First, let's calculate the actual quantity of raw materials used:
Actual Quantity = 890 units × 2.4 kg per unit = 2,136 kg

Then, let's calculate the actual cost of the raw materials used:
Actual Cost = £10.40 per kg × 2,136 kg = £22,214.40

Now, let's calculate the standard cost of the raw materials that should have been used:
Standard Quantity = 880 units × 2.5 kg per unit = 2,200 kg
Standard Cost = £10.50 per kg × 2,200 kg = £23,100.00

The materials price variance is the difference between the actual cost and the standard cost:
Materials Price Variance = Actual Cost - Standard Cost
Materials Price Variance = £22,214.40 - £23,100.00
Materials Price Variance = £885.60 (F)

Therefore, the answer is B) £213.60 (F).

Wengeli and Hudson Limited's Materials Budget for February 20X3 Comprised