In June, Indigo Manufacturing purchased 6,000 gallons of blue dye used to produce stone-washed denim clothing.The price per gallon was $1.24 and the company used 5,400 gallons of the dye during the month.The standard price for the dye is $1.26.What is the materials price variance for Indigo for June?

Question

Quizplus · Accepted Answer

The materials price variance is calculated as (Actual Price - Standard Price) x Actual Quantity Used. Here, it is ($1.24 - $1.26) x 5,400 = -$0.02 x 5,400 = -$108, which is favorable because the actual price is less than the standard price.

In June, Indigo Manufacturing Purchased 6,000 Gallons of Blue Dye