Luma Inc. has provided the following data concerning one of the products in its standard cost system. The company has reported the following actual results for the product for September:
The raw materials price variance for the month is closest to:
A) $9,081 U
B) $9,450 F
C) $9,450 U
D) $9,081 F

Question

Luma Inc. has provided the following data concerning one of the products in its standard cost system.  The company has reported the following actual results for the product for September:
 The raw materials price variance for the month is closest to:
A) $9,081 U 
B) $9,450 F 
C) $9,450 U 
D) $9,081 F

Quizplus · Accepted Answer

Materials price variance = (AQ × AP) − (AQ × SP)
= AQ × (AP − SP)
= 10,500 ounces × ($7.80 per ounce − $6.90 per ounce)
= 10,500 ounces × ($0.90 per ounce)
= $9,450 U
or
Materials price variance = (AQ × AP) − (AQ × SP)
= $81,900 − (10,500 ounces × $6.90 per ounce)
= $81,900 − $72,450
= $9,450 U

Luma Inc Has Provided the Following Data Concerning One of the the Products