Varney Corporation uses a solvent in its manufacturing process. The standard price established for the solvent is $2 per liter. A variance analysis for last month revealed an unfavorable price variance of $8,000 related to the purchase of 40,000 liters of this particular solvent. What actual price per liter did Varney pay for its purchases of the solvent last month?
A) $1.80
B) $0.20
C) $2.20
D) $2.00

Question

Quizplus · Accepted Answer

The unfavorable price variance of $8,000 for 40,000 liters means Varney paid $0.20 more per liter than the standard price of $2.00. Therefore, the actual price per liter was $2.20.

Varney Corporation Uses a Solvent in Its Manufacturing Process