Multiple Choice Question on Price Variance Masonry Products Corporation has esta

Question

Multiple Choice Question on Price Variance

Masonry Products Corporation has established the following materials standards for a particular product: Standard quantity per unit of output 6.3 feet Standard price $21.10 per feet The following data relates to operations concerning the product for the last month: Actual materials purchased 1.270 feet Actual cost of materials purchased $26,035 Actual materials used in production 1,170 feet Actual output 270 units What is the materials price variance for the month? $702 F $702 U $762 F $762 U

Explanation / Answer

Material price variance      = ( Actual price - Standard price ) x Actual quatity used

                                       = ( $20.5 - $21.10 ) x 1170 feet

                                       = $0.6 x 1170 feet

                                       = $ 702 F-favourable since actual price is less than standard price.

Actual price is arrived at as follows

Actual purchase amount           = $26035

Actual quantity purchased         = 1270 feet

Actual purchase price               = Actual purchase amount / Actual quantitiy purchased

                                              = $26035 / 1270 feet

                                              = $20.50

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