Question

A company purchases and uses 40000 gallons of materials for which they paid $3 a gallon. The materials price variance was $90000 favorable. What is the standard price per gallon?

Answer 1

the standard price per gallon is $5.25

Step-by-step explanation:

the computation of the standard price per gallon is given below;

Materials Price Variance = Actual Quantity × (Standard Price - Actual Price)

$90,000 = 40,000 × (Standard Price - $3)

$2.25 = Standard Price - $3

Standard Price = $5.25

Hence, the standard price per gallon is $5.25

The same should be considered