The Porter Company has a standard cost system.In July the company purchased and used 22,500 grams of direct material at an actual cost of $53,000;the materials quantity variance was $1,875 unfavourable;and the standard quantity of materials allowed for July production was 21,750 grams.The materials price variance for July was?

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Quizplus · Accepted Answer

The materials price variance is calculated as (Actual Quantity x Actual Price) - (Actual Quantity x Standard Price). We know the actual cost ($53,000) and the actual quantity (22,500 grams). The materials quantity variance is $1,875 U, which means the standard cost for the actual quantity used is $1,875 less than the standard cost for the standard quantity allowed. Solving for the standard price and using it to find the price variance gives us $3,250 F.

The Porter Company Has a Standard Cost System