To calculate the materials price variance, the formula is:

$\text{Materials Price Variance} = (\text{Actual Price per Pound} - \text{Standard Price per Pound}) \times \text{Actual Quantity Purchased}$

Given Data:

• Actual cost of materials purchased = $65,910
• Actual quantity of materials purchased = 16,900 pounds
• Standard price per pound = $4.00

Step 1: Calculate the Actual Price per Pound

$\text{Actual Price per Pound} = \frac{\text{Total Actual Cost}}{\text{Actual Quantity Purchased}}$ $\text{Actual Price per Pound} = \frac{65,910}{16,900} = 3.90$

Step 2: Calculate the Materials Price Variance

$\text{Materials Price Variance} = (3.90 - 4.00) \times 16,900$ $\text{Materials Price Variance} = (-0.10) \times 16,900 = -1,690$

Since the variance is negative, it is Unfavorable (U).

Final Answer:

$\boxed{\$1,690 \, \text{U}}$

Would you like a further breakdown or clarification?

Related Questions:

1. What is the formula for the materials usage variance, and how is it calculated in this scenario?
2. How do variable overhead costs impact the overall cost variance analysis?
3. Can you explain why variances are classified as favorable or unfavorable?
4. How does direct labor efficiency variance differ from material price variance?
5. Why might a company experience an unfavorable price variance?

Tip:

Always compare actual and standard costs or quantities carefully to determine the reason for variances—whether due to efficiency, pricing, or other operational factors.