A company purchases 20000 pounds of materials. The materials price variance is $4000 favorable. What is the difference between the standard and actual price paid for the materials?
A) $1.00
B) $0.20
C) $5.00
D) Cannot be determined from the data provided.

Question

Quizplus · Accepted Answer

The materials price variance is calculated as follows:

Materials price variance = (Standard price - Actual price) x Actual quantity purchased

Let x be the actual price paid for the materials. Then we can set up an equation based on the given data:

$4000 = (Standard price - x) x 20,000

Simplifying this equation, we get:

Standard price - x = $0.20 per pound

Therefore, the difference between the standard and actual price paid for the materials is $0.20 per pound.

The answer is B.

A Company Purchases 20000 Pounds of Materials