Oddo Corporation makes a product with the following standard costs:

The company reported the following results concerning this product in December.

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
-The materials price variance for December is:
A)$2,520 U
B)$2,520 F
C)$2,900 F
D)$2,900 U

Question

Oddo Corporation makes a product with the following standard costs:

The company reported the following results concerning this product in December.

The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
-The materials price variance for December is:
A)$2,520 U 
B)$2,520 F 
C)$2,900 F 
D)$2,900 U

Quizplus · Accepted Answer

The materials price variance is calculated as the difference between the actual price paid for materials and the standard price for materials. In this case, the actual price paid for materials was $2,900 and the standard price for materials was $2,520. Therefore, the materials price variance is $2,900 - $2,520 = $2,900 F.

Oddo Corporation Makes a Product with the Following Standard Costs