The Wright Company has a standard costing system. The following data are available for September:$\begin{array}{ll}
\text { Actual quantity of direct materials purchased } & 25,000 \text { pounds } \
\text { Standard price of direct materials } & £ 2 \text { per pound } \
\text { Material price variance } & £ 2,500 \text { unfavourable }
\end{array}$
The actual price per pound of direct materials purchased in September is

A)£1.85.
B)£2.00.
C)£2.10.
D)£2.15.

Question

The Wright Company has a standard costing system. The following data are available for September:$\begin{array}{ll}
\text { Actual quantity of direct materials purchased } & 25,000 \text { pounds } \
\text { Standard price of direct materials } & £ 2 \text { per pound } \
\text { Material price variance } & £ 2,500 \text { unfavourable }
\end{array}$
The actual price per pound of direct materials purchased in September is

A)£1.85.
B)£2.00.
C)£2.10.
D)£2.15.

Quizplus · Accepted Answer

The actual price per pound can be calculated by first determining the total actual cost of materials purchased, which is the standard cost plus the unfavorable variance. The standard cost for 25,000 pounds at £2 per pound is £50,000. An unfavorable variance of £2,500 means the actual cost was £2,500 more, so £52,500 in total. Dividing this by the actual quantity of 25,000 pounds gives an actual price per pound of £2.10.

The Wright Company Has a Standard Costing System The Actual Price Per Pound of Direct Materials Purchased in Data