The standard quantity of materials for a product was 40 pounds per unit at the standard price of $2.00 per pound. The actual price per pound of materials was $1.50, and the actual quantity used was 44 pounds. An analysis would indicate

Question

Quizplus · Accepted Answer

To calculate the price variance, we take the actual price per unit and subtract the standard price per unit, then multiply by the actual quantity used:

($1.50 - $2.00) x 44 = -$22.00

Since the actual price is lower than the standard price, this variance is favorable. However, we use a negative sign to indicate that it is below the standard. Therefore, the correct answer is B, which represents a $22.00 favorable price variance.

The Standard Quantity of Materials for a Product Was 40