Grub Chemical Corporation has developed cost standards for the production of its new cologne, ChocO. The variable cost standards below relate to each 10 gallon batch of ChocO:
Variable manufacturing overhead at Grub is applied based on direct labor-hours. The actual results for last month were as follows:

-What is ChocO's materials (milk chocolate)price variance?
A) $56 Favorable
B) $450 Favorable
C) $502 Unfavorable
D) $740 Unfavorable

Question

Grub Chemical Corporation has developed cost standards for the production of its new cologne, ChocO. The variable cost standards below relate to each 10 gallon batch of ChocO:
  Variable manufacturing overhead at Grub is applied based on direct labor-hours. The actual results for last month were as follows:
 
-What is ChocO's materials (milk chocolate)price variance?
A) $56 Favorable 
B) $450 Favorable 
C) $502 Unfavorable 
D) $740 Unfavorable

Quizplus · Accepted Answer

AQ × AP = $7,200
Materials price variance = (AQ × AP) − (AQ × SP)
= ($7,200) − (9,000 pounds × $0.85 per pound)
= $7,200 − $7,650
= $450 F

Grub Chemical Corporation Has Developed Cost Standards for the Production