Cuda Corporation makes a product that uses a material with the following standards: The company budgeted for production of 3,500 units in November, but actual production was 3,300 units. The company used 23,050 pounds of direct material to produce this output. The company purchased 26,000 pounds of the direct material at a total cost of $158,600. The direct materials purchases variance is computed when the materials are purchased.
-The materials price variance for November is:
A)$2,145 U
B)$2,145 F
C)$2,600 U
D)$2,600 F

Question

Cuda Corporation makes a product that uses a material with the following standards:  The company budgeted for production of 3,500 units in November, but actual production was 3,300 units. The company used 23,050 pounds of direct material to produce this output. The company purchased 26,000 pounds of the direct material at a total cost of $158,600. The direct materials purchases variance is computed when the materials are purchased.
-The materials price variance for November is:
A)$2,145 U 
B)$2,145 F 
C)$2,600 U 
D)$2,600 F

Quizplus · Accepted Answer

Materials price variance = (AQ F1F1F1S1F1F1F10 AP)- (AQ F1F1F1S1F1F1F10 SP)
= $158,600 - (26,000 pounds F1F1F1S1F1F1F10 $6.00 per pound)
= $158,600 - $156,000 = $2,600 U

Cuda Corporation Makes a Product That Uses a Material with the Following