Bulluck Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in July.
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
-The materials price variance for October is:
A) $15,000 Unfavorable
B) $15,000 Favorable
C) $25,000 Unfavorable
D) $25,000 Favorable

Question

Bulluck Corporation makes a product with the following standard costs:
  The company reported the following results concerning this product in July.
  The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
-The materials price variance for October is:
A) $15,000 Unfavorable 
B) $15,000 Favorable 
C) $25,000 Unfavorable 
D) $25,000 Favorable

Quizplus · Accepted Answer

AQ × AP = $225,000
Materials price variance = (AQ × AP) − (AQ × SP)
= ($225,000) − (12,000 ounces × $20.00 per ounce)
= $225,000 − $240,000
= $15,000 F

Bulluck Corporation Makes a Product with the Following Standard Costs