If the standard quantity of materials is 84,500 units @ $0.15 per unit and the actual quantity is 95,000 units @ $0.12 per unit,then the materials price variance is:
A)$2,850 Favorable.
B)$1,575 Unfavorable.
C)$1,275 Favorable.
D)$2,850 Unfavorable.

Question

Quizplus · Accepted Answer

The materials price variance is calculated as (Actual Quantity x Actual Price) - (Actual Quantity x Standard Price). Here, it is (95,000 x $0.12) - (95,000 x $0.15) = $11,400 - $14,250 = -$2,850, which is favorable because the actual cost is less than the standard cost.

If the Standard Quantity of Materials Is 84,500 Units @