A company uses 20000 pounds of materials for which it paid $6.00 a pound. The materials price variance was $15000 unfavorable. What is the standard price per pound?
A) $0.75
B) $5.25
C) $6.00
D) $6.75

Question

Quizplus · Accepted Answer

The standard price per pound is $5.25. The materials price variance is unfavorable, which means that the actual price paid for the materials was higher than the standard price. The variance is calculated as follows:Materials price variance = (Actual price - Standard price) x Actual quantity$15000 = (Actual price - $6.00) x 20000 poundsActual price = $6.00 + $15000 / 20000 poundsActual price = $6.00 + $0.75Actual price = $6.75The standard price per pound is $6.75 - $0.75 = $5.25.

A Company Uses 20000 Pounds of Materials for Which It