During the month of March, Baker's Express purchased 10,000 pounds of flour at $1 per pound. At the end of March, Baker's Express found that it had an unfavorable materials price variance of $500. The standard cost per pound must be
A) $1.95
B) $1.00
C) $1.05
D) $0.95

Question

Quizplus · Accepted Answer

An unfavorable materials price variance means that the actual cost was higher than the standard cost. The variance of $500 for 10,000 pounds means the actual cost was $0.05 more per pound than the standard cost. Therefore, the standard cost per pound was $1.00 - $0.05 = $0.95.

During the Month of March, Baker's Express Purchased 10,000 Pounds