ICAEW BIP · Chapter 9 · Question 2 of 13
A company bought 8,400 kg of material for £36,960. The standard price is £4.50 per kg. What is the material price variance?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) £840 favourable
Explanation
Standard cost of actual purchases = 8,400 x £4.50 = £37,800. Actual cost = £36,960. Price variance = £37,800 - £36,960 = £840 favourable, because the material cost less than standard (actual price £4.40 per kg).
More Standard costing and variance analysis MCQs
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