Last month, 75,000 kilograms of direct materials were purchased, and 71,000 kilograms were used

Accounting May 02, 2021

Last month, 75,000 kilograms of direct materials were purchased, and 71,000 kilograms were used. If the actual purchase price per kilogram was $0 50 more than the standard purchase price per kilogram, what was the materials price variance?
A. $2,000 favourable. B. $35,500 unfavourable. C. $37,500 favourable. D. $37,500 unfavourable.

Expert Solution

Answer

B .

Explanation

Computation of Material Price Variance:

Material Price Variance = Actual Quantity*(Actual Price - Standard Price)

Here,

Actual Quantity (AQ) = 71,000 Kilograms

Standard Price = x

Actual Price = 0.5+x

Material Price Variance = 71,000(($0.5+ $x - $x)

= 71,000($0.5)

Material Price Variance = $35,500 Unfavorable

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