Bulluck Corporation makes a product with the following standard costs: The company reported the following results concerning this product in July.
The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
The materials price variance for July is:
A) $2,100 U
B) $2,420 F
C) $2,100 F
D) $2,420 U

Question

Bulluck Corporation makes a product with the following standard costs:  The company reported the following results concerning this product in July.
 The company applies variable overhead on the basis of direct labor-hours. The direct materials purchases variance is computed when the materials are purchased.
The materials price variance for July is:
A) $2,100 U 
B) $2,420 F 
C) $2,100 F 
D) $2,420 U

Quizplus · Accepted Answer

Materials price variance = AQ × (AP − SP)
= 12,100 grams × ($1.20 per gram − $1.00 per gram)
= 12,100 grams × ($0.20 per gram)
= $2,420 U

Bulluck Corporation Makes a Product with the Following Standard Costs