Question

Standards for a product of Acme Mfg. Co. was 10,000 units of raw materials at a price of $20 per unit. The product’s actual usage of materials was 11,200 units at $18.50 per unit. What was Acme’s materials price variance?

Answer 1

The Acme’s materials price variance is $16,800 favorable

Step-by-step explanation:

Material Price variance: In material price variance, we have to take the net price and multiply it by the actual usage of materials.

The computation of the material price variance is shown below:

= Actual usage of materials × (Standard Price per unit - Actual Price per unit)

= 11,200 units × ($20 - $18.5) per unit

= 11,200 units × $1.5 per unit

= $16,800 favorable