The following materials standards have been established for a particular product: Standard quantity per unit of output 5.0 meters Standard price $ 17.70 per meter The following data pertain to operations concerning the product for the last month: Actual materials purchased 7,900 meters Actual cost of materials purchased $ 143,780 Actual materials used in production 7,400 meters Actual output 1,450 units What is the materials price variance for the month

Material price variance = $3,950 unfavorable

Explanation:

A material price variance occurs where materials are purchased at a price either lower or higher than the standard price. A favorable variance is recorded where the actual total cost of materials is lower that the standard cost. While an adverse variance implies the opposite.

$

7,900 meters should gave cost (7,900 * 17.70) 139,830

but did cost 143,780

Material price variance 3,950 Unfavorable

Material price variance = $3,950