Gipple Corporation makes a product that uses a material with the quantity standa

Question

Gipple Corporation makes a product that uses a material with the quantity standard of 9.1 grams per unit of output and the price standard of $7.80 per gram. In January the company produced 5,200 units using 26,670 grams of the direct material. During the month the company purchased 29,200 grams of the direct material at $7.90 per gram. The direct materials purchases variance is computed when the materials are purchased.

The materials price variance for January is:

A. 4,732 F

B. 2,920 U

C. 4,732 U

D. 2,920 F

Explanation / Answer

Materials price variance = 29200*(7.9-7.8) = $2920 U Option B is correct

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