Question

Crane Company has a materials price standard of $2.00 per pound. 4000 pounds of materials were purchased at $2.20 a pound. The actual quantity of materials used was 4000 pounds, although the standard quantity allowed for the output was 3400 pounds. Crane Company's materials price variance is

Answer 1

$2,000 (Unfavorable)

Step-by-step explanation:

Given that,

Actual Quantity = 4000 pounds of materials

Actual Rate = $2.20 a pound

Standard Quantity = 3,400 pounds

Standard Rate = $2 per pound

Total Materials price Variance:

= (Actual Quantity × Actual Rate) - (Standard Quantity × Standard Rate)

= (4,000 × $2.20) - (3,400 × $2)

= $8,800 - $6,800

= $2,000 (Unfavorable)