Choice "A" is correct. Material price variance is the difference between actual price and standard price times actual quantity.
(AP - SP) × AQ |
[($10,080 ÷ 4,200) - $2.50] × 4,200 |
($2.40 - $2.50) × 4,200420 |
The variance is favorable because the actual cost ($2.40) was less than the standard cost ($2.50).Choice "d" is incorrect. The material price variance equals the difference in prices times the quantity purchased.
Choice "c" is incorrect. The total material variance is $80 unfavorable ($10,000 − $10,080). This total variance needs to be separated into price and quantity variances.
Choice "b" is incorrect. The material price variance equals the difference in prices times the quantity purchased.
