Question 1 Russell Manufacturing makes a product that uses a material with the f

Question

Question 1 Russell Manufacturing makes a product that uses a material with the following standards: Not yet Standard quantity... 3.0 kilos per unit Standard price... $2.00 per kilo Standard cost... $6.00 per unit The company budgeted for production of 1,300 units in April, but actual production was 1,200 units. The company used 3,750 kilos of direct material to produce this output. The company purchased 3,800 kilos of the direct material at a total cost of $8,800 The direct materials purchases variance is computed when the materials are purchased. The materials price variance for April is: answered Points out of 3 F Flag question Select one: ? a·S-2,600.00 O b. $-14,000.00 O c. $1,184.21 O d. $1,200.00

Explanation / Answer

Solution: Answer is d. $1,200 Working Notes: Materials price variance = (AQ × AP) - (AQ × SP) = Actual material cost - Actual purchased quantity x Standard price per units =$8,800 - (3,800 kilos x $2 per kilo) =$8,800 - $7,600 =$1,200 Please feel free to ask if anything about above solution in comment section of the question.

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