The Apoundright Company uses standard costing and has established the following standards for its single product:
Direct materials: 2 gallons at $3 per gallon
Direct labor: 0.5 hours at $8 per hour
Variable overhead: 0.5 hours at $2 per hour
During November, the company made 4,000 units and incurred the following costs:
Direct materials purchased: 8,100 gallons at $3.10 per gallon
Direct materials used: 7,600 gallons
Direct labor used: 2,200 hours at $8.25 per hour
Actual variable overhead: $4,175
The company applies variable overhead to products on the basis of standard direct labor-hours.
-The materials price variance for November was:
A) $2,310 U
B) $2,310 F
C) $810 U
D) $810 F

Question

Quizplus · Accepted Answer

The materials price variance is calculated as follows: 
Actual quantity purchased × (actual price - standard price) 
= 8,100 gallons × ($3.10 - $3.00) 
= $810 U (unfavorable)

The Apoundright Company Uses Standard Costing and Has Established the Following