Craydye makes all sorts of moldings. Its standard quantity of material allowed is 1 foot of wood per 1 foot of molding at a standard price of $3.00 per foot. During August, it purchased 200,000 feet of wood at a cost of $2.00 per foot, which produced only 199,000 feet of molding. Calculate the materials price variance and the materials usage variance. a.$600,900 U and $2,500 F b.$200,000 F and $3,000 U c.$400,000 F and $1,000 U d.$700,000 U and $4,000 F

We choose b.$200,000 F and $3,000 U

Explanation:

Given that:

standard price of $3.00 per foot purchased 200,000 cost of $2.00 per foot produced only 199,000 feet of molding

Material Price Variance

= (Standard Price X Actual Quantity) - (Actual Price X Actual Quantity)

= ($ 3*200000) - ($ 2*200000)

= $ 600000 - $ 400000

= $ 200000 F

Material Usage variance

= (Standard Price X Standard Quantity) - (Standard Price X Actual Quantity)

= ($3 * 199000) - ($3*200000)

= $ 597000 - $ 600000

= $ 3000 U

We choose b.$200,000 F and $3,000 U

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