Question

In its first month of operations, Multiplex Corporation purchased 40,000 pounds of material for $3.40 per pound. The company used 38,000 pounds of the material to produce 18,000 units of its only product. Multiplex uses a standard cost system and its standard quantity and price per unit are 2 pounds at $3.50 per pound. What was the material price variance for the month?a. $4,000 favorableb. None of these.c. $4,000 unfavorabled. $2,000 unfavorablee. $2,000 favorable

Answer 1

The correct answer is A.

Step-by-step explanation:

Giving the following information:

Multiplex Corporation purchased 40,000 pounds of material for $3.40 per pound. The company used 38,000 pounds of the material to produce 18,000 units of its only product. Multiplex uses a standard cost system and its standard quantity and price per unit are 2 pounds at $3.50 per pound

To calculate the direct material price variance, we need to use the following formula:

Direct material price variance= (standard price - actual price)*actual quantity

Direct material price variance= (3.5 - 3.4)*40,000= $4,000 favorable