Glue For All has developed the following material standard to produce one container of Glue-It: 96 ounces of Chemical A at $0.15 per ounce.Glue For All planned to produce 2,000 containers of Glue-It during July.The company purchased 1,500 gallons (192,000 ounces) of Chemical A at a cost of $0.14 per ounce in July.The company used 1,480 gallons to produce 1,950 containers of Glue-It.How much is the material price variance?
A)$1,920 favorable
B)$1,894 favorable
C)$336 unfavorable
D)$1,584 unfavorable

Question

Quizplus · Accepted Answer

The material price variance is calculated as (Actual Price - Standard Price) * Actual Quantity. The standard price is $0.15 per ounce, and the actual price is $0.14 per ounce. The actual quantity purchased is 192,000 ounces. Therefore, the material price variance is ($0.14 - $0.15) * 192,000 = -$0.01 * 192,000 = -$1,920, which is favorable because the actual price is less than the standard price.

Glue for All Has Developed the Following Material Standard to Produce