Reenu Company manufactures wigs out of used dental floss. The variable cost standards for wig production developed by Reenu are as follows: Variable overhead at Reenu is based on direct labor-hours. The actual results for the month of October were as follows:
-What is Reenu's materials price variance for October?
A) $1,680 favorable
B) $12,760 unfavorable
C) $14,440 unfavorable
D) $15,420 unfavorable

Question

Reenu Company manufactures wigs out of used dental floss. The variable cost standards for wig production developed by Reenu are as follows:  Variable overhead at Reenu is based on direct labor-hours. The actual results for the month of October were as follows: 
-What is Reenu's materials price variance for October?
A) $1,680 favorable 
B) $12,760 unfavorable 
C) $14,440 unfavorable 
D) $15,420 unfavorable

Quizplus · Accepted Answer

Reenu's materials price variance is calculated as the difference between the actual price paid for materials and the standard price for materials. In October, Reenu paid $16,800 for materials, while the standard price for materials was $15,120. Therefore, Reenu's materials price variance for October is $1,680 favorable.

Reenu Company Manufactures Wigs Out of Used Dental Floss