Tharaldson Corporation makes a product with the following standard costs:
The company reported the following results concerning this product in June.
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 June is:
A) $2,140 U
B) $2,140 F
C) $1,820 U
D) $1,820 F

Question

Tharaldson Corporation makes a product with the following standard costs:
  The company reported the following results concerning this product in June.
  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 June is:
A) $2,140 U 
B) $2,140 F 
C) $1,820 U 
D) $1,820 F

Quizplus · Accepted Answer

AQ × AP = $40,660
Materials price variance = (AQ × AP) − (AQ × SP)
= ($40,660) − (21,400 ounces × $2.00 per ounce)
= $40,660 − $42,800
= $2,140 F

Tharaldson Corporation Makes a Product with the Following Standard Costs