Asked by
Nicholas Sykes
on Dec 16, 2024
Verified
A company uses 20000 pounds of materials for which it paid $6.00 a pound. The materials price variance was $15000 unfavorable. What is the standard price per pound?
A) $0.75
B) $5.25
C) $6.00
D) $6.75
Materials Price Variance
The difference between the actual cost and the standard cost of materials used in production, multiplied by the quantity of materials used.
Standard Price
A pre-determined cost assigned to goods and services, used as a benchmark in budgeting and variance analysis.
Pounds
A unit of weight commonly used in the British imperial and United States customary measurement systems.
- Understand the approach to calculate variance in direct materials, considering the implications of price and quantity fluctuations.
Verified Answer
JB
Learning Objectives
- Understand the approach to calculate variance in direct materials, considering the implications of price and quantity fluctuations.