Question
In: Accounting
Russell Manufacturing makes a product that uses a material with the following standards:
Russell Manufacturing makes a product that uses a material with the following standards: Standard quantity... 3.0 kilos per unit Standard price... $2.00 per kilo Standard cost... $6.00 per unit The company budgeted for production of 1,300 units in April, but actual production was 1,200 units. The company used 3,750 kilos of direct material to produce this output. The company purchased 3,700 kilos of the direct material at a total cost of $8,200 The direct materials purchases variance is computed when the materials are purchased. The materials price variance for April is: Select one: a. $800.00 b. $810.81 c. $-14,000.00 d. $-2,900.00
Solutions
Expert Solution
Actual quantity purchased = 3,700 kilos
Actual cost of materials purchased = $8,200
Actual price = Actual cost of materials purchased / Actual quantity purchased
= 8,200/3,700
= 2.216216216 per kilo
Standard price = $2 per kilo
Materials price variance = Actual quantity x (Standard price - Actual price)
= 3,700 x (2-2.216216216)
= 3,700 x (-0.216216216)
= $800 unfavorable
The materials price variance for April is $800.
Correct option is a.
ekkarill92 answered 2 years agoRelated Solutions
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