CIMA BA2 · Chapter 7 · Question 2 of 14
A company purchased 8,400 kg of material for $39,480. The standard price is $4.80 per kg. What is the material price variance?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $840 favourable
Explanation
Standard cost of actual purchases = 8,400 x $4.80 = $40,320. Actual cost = $39,480. Material price variance = $40,320 - $39,480 = $840 favourable, because less was paid than the standard allows (actual price $4.70 per kg).
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