Edgar Inc. has a materials price standard of $2.00 per pound. Six thousand pounds of materials were purchased at $2.20 a pound. The actual quantity of materials used was 6000 pounds although the standard quantity allowed for the output was 5400 pounds. Edgar Inc.'s materials price variance is
A) $120 U.
B) $1200 U.
C) $1080 U.
D) $1200 F.

Question

Quizplus · Accepted Answer

The materials price variance is calculated as (Actual Price - Standard Price) x Actual Quantity = ($2.20 - $2.00) x 6000 = $0.20 x 6000 = $1200 Unfavorable (U).

Edgar Inc Has a Materials Price Standard of $2