Question

Blue Lite manufactures decorative weather vanes that have a standard materials cost of two pounds of raw materials at $2 per pound. During November 500 pounds of raw materials costing $4 per pound were used in making 450 weather vanes. The materials price and quantity variance are: Group of answer choices

Answer 1

Answer: See explanation

Explanation:

The material price variance will be calculated as:

= (Standard price - Actual price) × Actual quantity of material used

= ($2 - $4) × 500

= -$2 × 500

= $-1000

= $1000 Unfavourable

The material quantity variance will be:

= Standard quantity - Actual quantity) × Standard price

=[(450 × 2) -500] × $2.00

= (900 - 500) × $2.00

= 400 × $2.00

= $800 Favorable