Basile Corp. produced 5,000 units this year. The standard quantity of raw materials per unit was 2 kilograms, and the standard price per kilogram was $3. The company actually used 2.1 kilograms per unit, and paid $3.10 per kilogram. The raw materials price variance was

Question

Quizplus · Accepted Answer

Standard quantity of raw materials per unit = 2 kg
Standard price per kilogram = $3
Therefore, the standard cost per unit of raw materials = 2 kg x $3/kg = $6/unit

Actual quantity of raw materials per unit = 2.1 kg
Actual price per kilogram = $3.10
Therefore, the actual cost per unit of raw materials = 2.1 kg x $3.10/kg = $6.51/unit

We can use the following formula to calculate the raw materials price variance:
Raw materials price variance = (Actual price - Standard price) x Actual quantity

Raw materials price variance = ($3.10 - $3) x 2.1 kg x 5,000 units
Raw materials price variance = $0.10 x 10,500 units
Raw materials price variance = $1,050 unfavorable

Therefore, the answer is A) $1,050 unfavorable.