Beakins Corporation produces a single product. The standard cost card for the product follows:

During a recent period the company produced 1,200 units of product. Various costs associated with the production of these units are given below:

  1. The company records all variances at the earliest possible point in time. Variable manufacturing overhead costs are applied to products on the basis of standard direct labor-hours.

The materials price variance for the period is:

  • $1,250 U
  • $1,500 U
  • $1,500 F
  • $1,250 F

Answer:

AQ × AP = $28,500
Materials price variance = (AQ × AP) − (AQ × SP)
= ($28,500) − (6,000 yards × $5 per yard)
= $28,500 − $30,000
= $1,500 F

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