Melrose Corporation makes a product that uses a material with the following stan
ID: 2448505 • Letter: M
Question
Melrose Corporation makes a product that uses a material with the following standards:
The company budgeted for production of 5,800 units in September, but actual production was 5,900 units. The company used 50,210 pounds of direct material to produce this output. The company purchased 55,100 pounds of the direct material at $5.80 per pound.
The direct materials purchases variance is computed when the materials are purchased.
The materials price variance for September is:
Standard quantity Standard price Standard cost 8.4 $6.00 pounds per unit per pound $50.40 per unitExplanation / Answer
Material Price Variance = ( Standard Price- Actual Price) Actual Quantity Purchased = (6-5.8)55100 11020 Material Purchase Price Variance is $ 11020 Favourable