hoemaker Perkins Company uses a standard cost system and had 590 pounds of raw material X15...
hoemaker Perkins Company uses a standard cost system and had 590 pounds of raw material X15 on hand on September 1. The standard cost of X15 is $20 per pound. The production standard calls for 2 pounds of material X15 for each unit of product manufactured. The company manufactured 790 units of the product in September, and had 880 pounds of material X-15 in stock on September 30. The actual price for material X-15 purchased during the month was $1 per pound below the standard cost. The material usage variance in September was $4,900 unfavorable. What is the purchase-price variance for material X in September, rounded to the nearest dollar?
Multiple Choice
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$1,235 favorable.
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$1,580 favorable.
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$1,870 favorable.
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$1,825 favorable.
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$2,115 favorable.
Homework Answers
Material usage variance = -$4,900
Standard material to be used for 790 units = 790 X 2 = 1,580
(1,580 X $20) - (Material used X $20) = -$4,900
Material used = 1,825
Actual purchase of raw materials calculation:
= Material used + Closing stock - Opening stock
= 1,825 + 880 - 590
= 2,115
Price variance = 2,115 X $1 = $2,115 favourable
5th option $2,115
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