House Co.’s purchasing department issued a variance report showing a total varia

Question

House Co.’s purchasing department issued a variance report showing a total variance of $1,680. Three types of materials were purchased, Material A, Material B, and Material C. House purchased 16,800 pounds of Material A at an actual price of $3.10 per pound and an unfavorable price variance of $1,680. The company purchased 4,800 pounds of Material B at an actual price of $2.75 per pound and a $240 favorable price variance. House also purchased 2,400 pounds of Material C at $5.20 per pound. Based on the information in the variance report, what is the standard price per pound of Material A?

A :

$3.10

B :

$3.00

C :

$3.20

D :

$2.90

Please show detail work

Explanation / Answer

Materials purchased (pounds)                                                           16,800.00 Actual price per pound                                                                     3.10 Total Price = Units*Actual price per pound                                                           52,080.00 Price variance= Units*(Standard price - Actual price per unit)=                                                           -1,680.00 16800*(Standard price per unit-3.10)=                                                           -1,680.00 Standard price per unit-3.10=                                                                    -0.10 Standard price per unit= -0.10+3.10=                                                                     3.00

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