Question

A company purchases 20,000 pounds of materials. The materials price variance is $4,000 favorable. What is the difference between the standard and actual price paid for the materials?

1)$1.00
2)$0.20
3)$5.00
4)Cannot be determined from the data provided.

Answer 1

The difference between the standard and actual price paid for the materials is $4,000.

Step-by-step explanation:

The difference between the standard and actual price paid for the materials can be found using the materials price variance. In this case, the materials price variance is $4,000 favorable, which means that the company paid $4,000 less than the standard price for the materials. Since the variance is favorable, it indicates that the actual price paid is lower than the standard price, resulting in savings for the company.

Therefore, the difference between the standard and actual price paid for the materials is $4,000.