Question

The following material standards have been established for a particular product: Standard quantity per unit of output... 6.8 Meters Standard Price...$14.40 per MeterThe following data pertain to operations concerning teh product for the last month:Actual materials purchased... 4,400 metersActual cost of materials purchased... $60,500Actual materials used in production...3,800 metersActual output...400 unitsQ: What is the materials price variance for the month?A:$14,850 UB:$8,250 UC:$8,640 UD:$2,860 F

Answer 1

$2,860 F

Step-by-step explanation:

DIRECT MATERIALS VARIANCES

`(standard\:cost-actual\:cost) * actual \: quantity= DM \: price \: variance`

std cost $14.40

actual cost $13.75

quantity 4,400

`(14.40-13.75) * 4,400= DM \: price \: variance`

difference $0.65

price variance $2,860.00

The difference between std cost and actual cost is positive, the company saved cost per meter. This difference makes the variance favorable.

Now multiplying the meters purchased by the save per meter will give us the total price variance