Question

Awesome Company has a manufacturing facility in Brooklyn that manufactures robotic equipment for the auto industry. For Year 1, Awesome collected the following information from its main production line: Click the icon to view the data.) Awesome isolates price variances at the time of purchase. What is the materials price variance for Year 1? i Data Table X O 1. $200 unfavorable O 2. $300 favorable O 3. $300 unfavorable 4. $200 favorable 300 units 200 units Actual quantity purchased Actual quantity used Units standard quantity Actual price paid Standard price 170 units $12 per unit $13 per unit

Answer 1

The materials price variance for Year 1 is 3. $300 unfavorable. (Option 3)

Step-by-step explanation:

The materials price variance is calculated by multiplying the difference between the actual price paid and the standard price by the actual quantity purchased. In this case:

`\[ \text{Materials Price Variance} = (\text{Actual Price} - \text{Standard Price}) * \text{Actual Quantity Purchased} \]`

Substituting the given values:

`\[ (12 - 13) * 170 = -300 \]`

The negative sign indicates an unfavorable variance. Therefore, the materials price variance for Year 1 is $300 unfavorable.

The unfavorable variance suggests that Awesome Company paid $1 more per unit of material than the standard price. This could be due to various factors such as unexpected increases in market prices or negotiations that did not result in favorable terms. Analyzing and addressing such variances is crucial for effective cost management and ensuring that the company's resources are utilized efficiently in the manufacturing process.(Option 3)