Question

Staley Company has a standard of 1.5 pounds of materials per unit, at $4 per pound. In producing 2,000 units, Staley used 3,100 pounds of materials at a total cost of $12,090. Staley's materials price variance is

	A.	$90 U.
	B.	$310 F.
	C.	$400 F.
	D.	$700 F.

Answer 1

Ans: B. $ 310 F

Material Price Variance = Actual Quantity of Material Purchased x  (Standard Price of Material per unit - Actual Price of material per unit) = 3100 Pounds x ( $ 4 - $ 3.9) = $ 310 F

Actual price of material per unit = Total Cost of Material / Actual Quantity of Material Purchase = $ 12090 / 3100 Pounds = $ 3.90

A favorable outcome means you spent less on the purchase of materials than you anticipated. If, however, the actual price paid per unit of material is greater than the standard price per unit, the variance will be unfavorable.An unfavorable outcome means you spent more on the purchase of materials than you anticipated.In this case spent less than standard price per unit , so Favourable.