Problem -
A company isolates its raw material price variance in order to provide the earliest possible information to the manager responsible for the variance. The budgeted amount of material usage for the year was computed as follows:
50,000 units of finished goods × 2 lbs./unit × $8.00/lb. = $800,000
Actual results for the year were the following:
Finished goods produced 49,500 units
Raw materials purchased 102,000 pounds
Raw materials used 96,525 pounds
Cost per pound $7.50
1. The raw material price variance for the year was:
A $51,000
B $45,525
C $48,263
D -$51,000
2. The raw materials quantity purchased variance was:
A $16,000
B -$15,000
C -$16,000
D $15,000
3. The total raw materials variance (for purchased) is:
A $33,263
B $35,000
C $32,263
D $67,000