In October, 5,000 meters of raw material were purchased at an actual cost of $4.50 per meter. During October, 4,850 meters of the raw material were used to produce 2,400 units of the completed product. Standards call for 2 meters of the raw material for each unit of the completed product. The standard price of the raw material is $4.70 per meter. The materials variances for October were:
Materials price variance Materials quantity variance
A) $970 F $225 U
B) $1000 F $225 U
C) $970 F $235 U
D) $1000F $235 U
Material Price Variance(MPV) = (Std. Cost - Actual Cost)* Actual Qty
MPV = (4.70 - 4.50)*4850 = $970 ...
The solution computes Materials price variance and Materials quantity variance.