Question

The following materials standards have been established for a particular product: Standard quantity per unit of output 5.5 meters Standard price $ 19.10 per meter The following data pertain to operations concerning the product for the last month: Actual materials purchased 9,100 meters Actual cost of materials purchased $ 182,700 Actual materials used in production 8,600 meters Actual output 1,540 units What is the materials price variance for the month?

Answer 1

· Material Price Variance can be based on ‘actual qty purchased’ and ‘actual qty used’.

· Answer, based on actual quantity purchased

Material Price Variance
(	Standard Rate	-	Actual Rate = $ 182700 / 9100 meters	)	x	Actual Quantity purchased
(	$                             19.10	-	$                    20.0769230769	)	x	9100
	-8890
	Variance		$              8,890.00			Unfavourable-U

· Answer, based on actual quantity used

Material Price Variance
(	Standard Rate	-	Actual Rate	)	x	Actual Quantity used
(	$                             19.10	-	$                    20.0769230769	)	x	8600
	-8401.538462
	Variance		$              8,401.54			Unfavourable-U