The actual price per unit and price per unit estimated in the plan are $15 and $20,respectively.The actual volume of units produced is 25,000 units.Calculate the price variance.
A)$125,000
B)-$125,000
C)$500,000
D)-$375,000
E)$375,000

Question

Quizplus · Accepted Answer

Price variance = (Actual price - Budgeted price) x Actual quantity
= ($15 - $20) x 25,000
= -$125,000
The negative sign indicates that the actual price was lower than the budgeted price, resulting in a favorable variance.

The Actual Price Per Unit and Price Per Unit Estimated