Math Problem Statement
Solution
To calculate the materials price variance, the formula is:
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
Step 2: Calculate the Materials Price Variance
Since the variance is negative, it is Unfavorable (U).
Final Answer:
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Related Questions:
- What is the formula for the materials usage variance, and how is it calculated in this scenario?
- How do variable overhead costs impact the overall cost variance analysis?
- Can you explain why variances are classified as favorable or unfavorable?
- How does direct labor efficiency variance differ from material price variance?
- 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.
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Math Problem Analysis
Mathematical Concepts
Variance Analysis
Standard Costing
Formulas
Materials Price Variance = (Actual Price per Unit - Standard Price per Unit) × Actual Quantity Purchased
Actual Price per Unit = Total Actual Cost / Actual Quantity Purchased
Theorems
Variance Classification (Favorable or Unfavorable)
Suitable Grade Level
Grades 10-12 or introductory college-level accounting
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