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The following materials standards have been established for a particular product: Standard quantity per unit of output 4.2 meters Standard price $ 18.40 per meter The following data pertain to operations concerning the product for the last month: Actual materials purchased 7,200 meters Actual cost of materials purchased $ 138,600 Actual materials used in production 6,700 meters Actual output 1,550 units
What is the materials price variance for the month?
$3,658 U
$7,700 U
$11,770 U
$6,120 U
Expert Answer
| STANDARD COST FOR MATERIAL | |||
| Std. Quantity Per Unit | Standard Price | Standard Cost Per Unit | |
| 4.2 | 18.4 | 77.28 | |
| Actual Rate per unit = Actual Cost / Actual Material Purchased | |||
| Actual Rate per unit = $138,600 / 7200 | |||
| Actual Rate per unit = $ 19.25 Per Meter | |||
| Material price Variance = (Standard Price – Actual Price) * Actual Quantity | |||
| Standard Prcie = $18.40 Per Meter | |||
| Actual Prcie = $19.25 Per Meter | |||
| Actual Quantity Purchased = 7200 Meters | |||
| Material price Variance = ($18.40 – $19.25) * 7200 Meters | |||
| Material price Variance = $ 0.85 * 7200 Meters | |||
| Material price Variance = $ 6120 (Unfavorable) | |||
| Answer = Option 4= Material Price variance = $ 6120 (Unfavorable) | |||
