The following materials standards have been established for a particular product: The following data pertain to operations concerning the product for the last month: What is the materials price variance for the month?
A)$3,141 U
B)$2,025 U
C)$8,600 U
D)$8,725 U

Question

The following materials standards have been established for a particular product:  The following data pertain to operations concerning the product for the last month:  What is the materials price variance for the month?
A)$3,141 U 
B)$2,025 U 
C)$8,600 U 
D)$8,725 U

Quizplus · Accepted Answer

Materials price variance = (actual price - standard price) x actual quantity
Actual price = $9.50 per unit (given)
Standard price = $10.00 per unit (given)
Actual quantity = 6,900 units (given)
Materials price variance = ($9.50 - $10.00) x 6,900 = $3,450 U
Since the actual price is lower than the standard price, the variance is unfavorable (U). Therefore, the correct answer is B. Materials price variance = (AQ × AP)- (AQ × SP)
= $141,345 - (8,100 meters × $17.20 per meter)
= $141,345 - $139,320
= $2,025 U

The Following Materials Standards Have Been Established for a Particular