Imrie Corporation makes a product that uses a material with the quantity standard of 9.5 grams per unit of output and the price standard of $5.00 per gram. In January the company produced 2,900 units using 26,940 grams of the direct material. During the month the company purchased 28,900 grams of the direct material at $4.90 per gram. The direct materials purchases variance is computed when the materials are purchased. The materials price variance for January is:
A)$2,755 U
B)$2,890 F
C)$2,890 U
D)$2,755 F

Question

Quizplus · Accepted Answer

The materials price variance is calculated as (Actual Price - Standard Price) x Actual Quantity Purchased. Here, it is ($4.90 - $5.00) x 28,900 grams = $2,890 Favorable.

Imrie Corporation Makes a Product That Uses a Material with the Quantity