Perfect Builders makes all sorts of moldings. Its standard quantity of material allowed is 1 foot of wood per 1 foot of molding at a standard price of $2.00 per foot. During August, it purchased 500,000 feet of wood at a cost of $1.90 per foot, which produced only 499,000 feet of molding. Calculate the materials price variance and the materials usage variance, respectively.
A) $50,000 F and $2,000 U
B) $49,900 U and $2,000 F
C) $50,000 F and $1,900 U
D) $49,900 F and $1,900 U

Question

Quizplus · Accepted Answer

The materials price variance is favorable by $50,000 ($1.90 - $2.00 x 500,000 feet). The materials usage variance is unfavorable by $2,000 (500,000 feet - 499,000 feet x $2.00).

Perfect Builders Makes All Sorts of Moldings