Blaster Inc., manufactures portable radios. Each radio requires 3 units of Part XBEZ52, which has a standard cost of $1.45 per unit. During May, the company purchased 12,000 units of the part for a total of $18,000. Also during May, the company manufactured 3,000 radios, using 10,000 units of part XBEZ52. The direct materials purchases variance is computed when the materials are purchased. During May, the materials price variance for part XBEZ52 was:
A)$450 U
B)$450 F
C)$600 F
D)$600 U

Question

Quizplus · Accepted Answer

The materials price variance is calculated as (Actual Price - Standard Price) x Actual Quantity Purchased. The actual price per unit is $18,000 / 12,000 = $1.50. The variance is ($1.50 - $1.45) x 12,000 = $600 Unfavorable.