Question

A company uses 8,400 pounds of materials and exceeds the standard by 300 pounds. The quantity variance is $1,800 unfavorable. What is the standard price? Please show work.a. 2.00b. 4.00c. 6.00d. cannot be determined

Answer 1

c. 6.00

Step-by-step explanation:

We know,

Quantity variance = (Actual Quantity used - Standard Quantity used) x Standard Rate

Given,

Quantity variance = $1,800 unfavorable (Here, Unfavorable means actual quantity is higher than standard quantity).

Actual Quantity used = 8,400 pounds of materials

As actual quantity exceeds the standard quantity by 300 pounds, standard quantity = (8,400 - 300) = 8,100 pounds of material.

Therefore,

Quantity variance = (Actual Quantity used - Standard Quantity used) x Standard Rate

or, $1,800 unfavorable = (8,400 - 8,100) pounds x Standard Rate

or, $1,800 unfavorable = 300 pounds x Standard Rate

or, Standard rate = $1,800/300 pounds

Hence, Standard Rate = $6.00.