Question

A company uses 40000 pounds of materials for which it paid $2 a pound. The materials price variance was $20000 unfavorable. What is the standard price per pound

Answer 1

Standard price= $1.5

Step-by-step explanation:

Giving the following information:

A company uses 40000 pounds of materials for which it paid $2 a pound. The materials price variance was $20000 unfavorable.

To calculate the standard price, we need to use the following formula:

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

-20,000= (standard price - 2)*40,000

-20,000= 40,000standard price - 80,000

60,000/40,000= standard price

standard price= $1.5