A company uses 8400 pounds of materials and exceeds the standard by 300 pounds. The quantity variance is $1800 unfavorable. What is the standard price?
A) $2
B) $4
C) $6
D) Cannot be determined from the data provided.

Question

Quizplus · Accepted Answer

First, we need to calculate the standard quantity of materials:

Standard Quantity = Actual Quantity + Quantity Variance
Standard Quantity = 8400 + 300 = 8700 pounds

Next, we can use the formula for material quantity variance:

Quantity Variance = (Standard Price x Actual Quantity) - (Standard Price x Standard Quantity)

Since we are given the quantity variance as $1800 unfavorable, we can plug in the known values and solve for the standard price:

-1800 = (Standard Price x 8400) - (Standard Price x 8700)
-1800 = Standard Price x (-300)
Standard Price = 6

Therefore, the standard price is $6 per pound of material.

A Company Uses 8400 Pounds of Materials and Exceeds the Standard