Question

For the current period production levels, Woodwork Co. budgeted 11,000 board feet of production and purchased 15,000 board feet. The material cost was budgeted at $7 per foot. The actual cost for the period was $8.50 per foot. What was Woodwork's materials price variance for the period?

Option 1: $14,500 unfavorable

Option 2: $10,500 favorable

Option 3: $14,500 favorable

Option 4: $10,500 unfavorable

Answer 1

To calculate the materials price variance for Woodwork Co., subtract the budgeted cost per foot from the actual cost per foot and multiply by the actual quantity purchased. The result is an unfavorable variance of $22,500, which does not match the provided options.

Step-by-step explanation:

The student has asked how to calculate the materials price variance for Woodwork Co. based on the budgeted and actual costs. To find the materials price variance, we take the difference between the actual cost per unit and the budgeted cost per unit and multiply by the number of units purchased. The variance can be favorable or unfavorable depending on whether the actual cost is below or above the budgeted cost, respectively.

Variance = (Actual cost per foot - Budgeted cost per foot) × Actual quantity purchased

Using the given figures:

Variance = ($8.50 - $7.00) × 15,000 board feet

Variance = $1.50 × 15,000 board feet

Variance = $22,500 unfavorable

However, none of the provided options match this result. The closest option is $22,500 unfavorable, which is not listed here. It seems there might be a mistake in the question or the options provided.