Luma Inc. has provided the following data concerning one of the products in its

Question

Luma Inc. has provided the following data concerning one of the products in its standard cost system.

Inputs

Standard Quantity or Hours per Unit of Output

Standard Price or Rate

Direct materials

4.8 ounces

$6.90 per ounce

The company has reported the following actual results for the product for September:

Actual output

2,100

units

Raw materials purchased

10,500

ounces

Actual price of raw materials

$

7.80

per ounce

Actual cost of raw materials purchased

$

81,900

Raw materials used in production

10,090

ounces

The raw materials price variance for the month is closest to:

A) $9,081 U

B) $9,450 F

C) $9,450 U

D) $9,081 F

Inputs

Standard Quantity or Hours per Unit of Output

Standard Price or Rate

Direct materials

4.8 ounces

$6.90 per ounce

Explanation / Answer

Material price variance = (Standard price-actual price)actual quantity purchased

= (6.9*10500-81900)

Material price variance = 9450 U

So answer is c) $9450 U

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