Use the following information for questions
Bridgeware Company has a materials price standard of $2.50 per kilogram.Four thousand kilograms of materials were purchased at $2.40 a kilogram.The actual quantity of materials used was 3,500 kilograms, although the standard quantity allowed for the output was 3,400 kilograms.
-Bridgeware Company's total materials variance is
A)$150 F.
B)$1,500 U.
C)$1,250 U.
D)$100 F.

Question

Use the following information for questions 
Bridgeware Company has a materials price standard of $2.50 per kilogram.Four thousand kilograms of materials were purchased at $2.40 a kilogram.The actual quantity of materials used was 3,500 kilograms, although the standard quantity allowed for the output was 3,400 kilograms.
-Bridgeware Company's total materials variance is
A)$150 F.
B)$1,500 U.
C)$1,250 U.
D)$100 F.

Quizplus · Accepted Answer

The total materials variance is calculated by comparing the actual cost of materials to the standard cost of materials for the actual quantity used. The actual cost is 3,500 kilograms * $2.40 = $8,400. The standard cost for the actual quantity used is 3,500 kilograms * $2.50 = $8,750. The variance is $8,400 - $8,750 = -$350, which means it's a $350 unfavorable variance. However, there's also a purchase price variance to consider: (Standard price - Actual price) * Actual quantity purchased = ($2.50 - $2.40) * 4,000 = $0.10 * 4,000 = $400 favorable. The total materials variance is the sum of these two variances: -$350 (unfavorable usage variance) + $400 (favorable price variance) = $50 favorable. It seems there was a mistake in my initial calculation. Let's correct that: The correct approach to find the total materials variance combines both the price and quantity variances. Price Variance = (Standard Price - Actual Price) * Actual Quantity Purchased = ($2.50 - $2.40) * 4,000 = $0.10 * 4,000 = $400 favorable. Quantity Variance = (Standard Quantity for Actual Output - Actual Quantity Used) * Standard Price = (3,400kg - 3,500kg) * $2.50/kg = -100kg * $2.50/kg = -$250 unfavorable. Total Variance = Price Variance + Quantity Variance = $400 F - $250 U = $150 favorable.

Use the Following Information for Questions