Turrubiates Corporation makes a product that uses a material with the following standards: The company budgeted for production of 2,300 units in April, but actual production was 2,400 units. The company used 16,410 liters of direct material to produce this output. The company purchased 18,600 liters of the direct material at $1.10 per liter.
The direct materials purchases variance is computed when the materials are purchased.
The materials price variance for April is:
A) $1,860 U
B) $1,860 F
C) $1,560 U
D) $1,560 F

Question

Turrubiates Corporation makes a product that uses a material with the following standards:  The company budgeted for production of 2,300 units in April, but actual production was 2,400 units. The company used 16,410 liters of direct material to produce this output. The company purchased 18,600 liters of the direct material at $1.10 per liter.
The direct materials purchases variance is computed when the materials are purchased.
The materials price variance for April is:
A) $1,860 U 
B) $1,860 F 
C) $1,560 U 
D) $1,560 F

Quizplus · Accepted Answer

Materials price variance = AQ × (AP − SP)
= 18,600 liters × ($1.10 per liter − $1.00 per liter)
= 18,600 liters × ($0.10 per liter)
= $1,860 U

Turrubiates Corporation Makes a Product That Uses a Material with the Following