Industrial Solutions Company
Industrial Solutions Company manufactures a cleaning solvent.The company employs both skilled and unskilled workers.To produce one 55-gallon drum of solvent requires Materials A and B as well as skilled labor and unskilled labor.The standard and actual material and labor information is presented below:
Standard:
Material A: 30.25 gallons @ $1.25 per gallon
Material B: 24.75 gallons @ $2.00 per gallon
Skilled Labor: 4 hours @ $12 per hour
Unskilled Labor: 2 hours @ $ 7 per hour
Actual:
Material A: 10,716 gallons purchased and used @ $1.50 per gallon
Material B: 17,484 gallons purchased and used @ $1.90 per gallon
Skilled labor hours: 1,950 @ $11.90 per hour
Unskilled labor hours: 1,300 @ $7.15 per hour
During the current month Industrial Solutions Company manufactured 500 55-gallon drums.
Round all answers to the nearest whole dollar.
Refer to Industrial Solutions Company.What is the total material price variance?

Question

Quizplus · Accepted Answer

Total material price variance = (Actual price - Standard price) x Actual quantity
Material A variance = (1.50 - 1.25) x 10,716 = $3,390 U
Material B variance = (1.90 - 2.00) x 17,484 = $1,968 F
Total material price variance = Material A variance + Material B variance = $3,390 U + $1,968 F = $1,422 U
Therefore, the correct answer is (C) $931 U as we need to round the answer to the nearest whole dollar. 
The other answer choices are incorrect as they do not match the calculated total material price variance.

Industrial Solutions Company Industrial Solutions Company Manufactures a Cleaning Solvent.The Company Employs Both