Todco planned to produce 3,000 units of its single product, Teragram, during November. The standard specifications for one unit of Teragram include six pounds of material at $0.30 per pound. Actual production in November was 3,100 units of Teragram. The accountant computed a favorable materials purchase price variance of $380 and an unfavorable materials quantity variance of $120. Based on these variances, one could conclude that:
A)more materials were purchased than were used.
B)more materials were used than were purchased.
C)the actual cost of materials was less than the standard cost.
D)the actual usage of materials was less than the standard alloweD.Materials price variance = AQ (AP - SP)

Question

Quizplus · Accepted Answer

The favorable materials purchase price variance indicates that the actual cost of materials was less than the standard cost.

Todco Planned to Produce 3,000 Units of Its Single Product