Cox Engineering performs cement core tests in its laboratory. The following standards have been set for each core test performed: During March, the laboratory performed 2,000 core tests. On March 1 no direct materials (sand) were on hand. Variable manufacturing overhead is assigned to core tests on the basis of standard direct labor-hours. The following events occurred during March:

• 8,600 pounds of sand were purchased at a cost of $7,310.
• 7,200 pounds of sand were used for core tests.
• 840 actual direct labor-hours were worked at a cost of $8,610.
• Actual variable manufacturing overhead incurred was $3,200.

-The materials price variance for March is:
A)$860 unfavorable
B)$860 favorable
C)$281 unfavorable
D)$281 favorable

Question

Cox Engineering performs cement core tests in its laboratory. The following standards have been set for each core test performed:  During March, the laboratory performed 2,000 core tests. On March 1 no direct materials (sand) were on hand. Variable manufacturing overhead is assigned to core tests on the basis of standard direct labor-hours. The following events occurred during March:

• 8,600 pounds of sand were purchased at a cost of $7,310.
• 7,200 pounds of sand were used for core tests.
• 840 actual direct labor-hours were worked at a cost of $8,610.
• Actual variable manufacturing overhead incurred was $3,200.

-The materials price variance for March is:
A)$860 unfavorable 
B)$860 favorable 
C)$281 unfavorable 
D)$281 favorable

Quizplus · Accepted Answer

Materials price variance = AQ (AP - SP)= AQ F1F1F1S1F1F1F10 AP - AQ F1F1F1S1F1F1F10 SP
= $7,310 - (8,600 pounds F1F1F1S1F1F1F10 $0.75 per pound)
= $7,310 - $6,450 = $860 U

Cox Engineering Performs Cement Core Tests in Its Laboratory