Styles Warnleigh Limited's materials budget for February 20X2 comprised 4.5 kg.of raw material at a standard cost of £3.50 per kg.for each unit produced and sold.Actual sales and production for the month was 286 units.£3.62 was actually paid for each kg of raw material used in the month, and the actual input to each product unit was 4.3 kg. What was the materials price variance for February 20X2?

Question

Quizplus · Accepted Answer

The materials price variance is calculated as (Actual Price - Standard Price) x Actual Quantity Purchased. The actual quantity purchased is not directly given, but we can infer it from the actual input per unit and the actual production, which is 4.3 kg/unit * 286 units = 1230.8 kg. The variance is then (3.62 - 3.50) * 1230.8 = £147.58. Since the actual price is higher than the standard, this is an adverse variance.

Styles Warnleigh Limited's Materials Budget for February 20X2 Comprised 4