Standards for a product of Acme Mfg. Co. was 10,000 units of raw materials at a price of $20 per unit. The product's actual usage of materials was 11,200 units at $18.50 per unit. What was Acme's materials price variance?

Question

Corbin Terry

Business

20 March, 00:43

Standards for a product of Acme Mfg. Co. was 10,000 units of raw materials at a price of $20 per unit. The product's actual usage of materials was 11,200 units at $18.50 per unit. What was Acme's materials price variance?

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Answers (1)

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Cheyanne Ramsey · Answer 1

The Acme's materials price variance is $16,800 favorable

Explanation:

Material Price variance: In material price variance, we have to take the net price and multiply it by the actual usage of materials.

The computation of the material price variance is shown below:

= Actual usage of materials * (Standard Price per unit - Actual Price per unit)

= 11,200 units * ($20 - $18.5) per unit

= 11,200 units * $1.5 per unit

= $16,800 favorable