The Porter Company has a standard cost system.In July,the company purchased and used 22,500 kilograms of direct material at an actual cost of $53,000,the materials quantity variance was $1,875 unfavourable,and the standard quantity of materials allowed for July production was 21,750 kilograms.What was the materials price variance for July?
A) $2,725 favourable.
B) $2,725 unfavourable.
C) $3,250 favourable.
D) $3,250 unfavourable.Variance = 22,500 * 2.50 - 53,000 = $3,250 favourable.

Question

Quizplus · Accepted Answer

The materials price variance is calculated as (Actual Quantity x Standard Price) - Actual Cost. Given the variance is $3,250 favourable, it indicates the actual cost was less than the standard cost for the actual quantity used.

The Porter Company Has a Standard Cost System