James received a report from the production and purchasing departments with the following values for January: Actual materials quantity: 90,000 pounds Total actual cost: $47,200 Standard materials quantity: 5.5 pounds/unit Standard price: $0.55/pound Units made: 16,300 Two days later, he got a correction report from the purchasing department that they found another invoice for $6,200. How much would James' materials price variance change for the month of January?

A : $3,900 F

B : $3,900 U

C : $6,200 U

D : $6,200 F

Question

Business

Addison Farley

13 December, 15:36

James received a report from the production and purchasing departments with the following values for January: Actual materials quantity: 90,000 pounds Total actual cost: $47,200 Standard materials quantity: 5.5 pounds/unit Standard price: $0.55/pound Units made: 16,300 Two days later, he got a correction report from the purchasing department that they found another invoice for $6,200. How much would James' materials price variance change for the month of January?

A : $3,900 F

B : $3,900 U

C : $6,200 U

D : $6,200 F

+1

Answers (1)

Know the Answer?

Gideon Everett · Answer 1

The correct answer is B.

Explanation:

Giving the following information:

Actual materials quantity: 90,000 pounds

Total actual cost: $47,200 + 6,200 = $53,400

Standard materials quantity: 5.5 pounds/unit

Standard price: $0.55/pound

Units made: 16,300

We need to use the following formula:

Direct material price variance = (standard price - actual price) * actual quantity

Direct material price variance = (0.55 + 53,400/90,000) * 90,000 = $3,900 unfavorable