Global Company makes a product that is expected to use 2.2 pounds of material per unit of product.The material has a standard cost of $2 per pound.Global actually used 2.3 pounds of material per unit of product made in January.The actual cost of material was $1.95 per pound.Based on this information alone,the materials variances for the January production would be:
A) Favorable for price and unfavorable for usage.
B) Unfavorable for price and favorable for usage.
C) Unfavorable for price and unfavorable for usage.
D) Favorable for price and favorable for usage.

Question

Quizplus · Accepted Answer

The material price variance is favorable because the actual cost per pound ($1.95) is less than the standard cost per pound ($2). The material usage variance is unfavorable because more material was used per unit (2.3 pounds) than the standard (2.2 pounds).

Global Company Makes a Product That Is Expected to Use