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Combo Company uses a standard cost system. Information for raw materials for Product #4 for the month of June are as follows: Standard price per pound of raw materials $1.6 Actual purchase price per pound of raw materials $1.55 Actual quantity of raw materials purchased2,0 pounds Actual quantity of raw materials used1,900 pounds Standard quantity allowed for actual production1,800 pounds What is the materials purchase price variance? a. $90 favorable b. $90 unfavorable c. $100 favorable d. $100 unfavorable
letter d. unfavorable (likely to cause problem or difficulties)
D
= Diff in Price (.5*2*100)
Hence $100 excess purchase Unfavourable to the company
When Material price variance recorded at the time of purchase then
Material Price Variances (UF) 100 =2000 units x (1.6-1.55)
When Material price variance recorded at the time of usage then
Material Price Variances (UF) 90 =1800 units x (1.6-1.55)
