Refer to Brennan Company. What is the material price variance (calculated at poi

Question

Refer to Brennan Company. What is the material price variance (calculated at point of purchase)?

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Solution

Brennan Company

The following information is for Brennan Company's September production:
Standards: Material 4.0 feet per unit @ $3.75 per foot Labor 3.0 hours per unit @ $8.25 per hour Actual: Production 3,500 units produced during the month Material 14,200 feet used; 14,700 feet purchased @ $3.70 per foot Labor 10,400 direct labor hours @ $8.35 per hour
(Round all answers to the nearest dollar.)

Explanation / Answer

Material price variance    = ( Actual price - Standard price ) x Actual quantity used

                                     = ( $3.70- $ 4.00 ) x 14,200 feet used

                                     = $0.30 x 14,200

                                     = $4260-F-favourable since actual price is less than standard price.

None of the options given is correct.

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