Bulk PVC Materials Price Variance Calculation
Bulk PVC manufactures PVC pipes for plumbing. The direct materials quantity standard is 1.3 pounds of PVC per pipe, and one pound of PVC is expected to cost $1.89. In June, Bulk made 50,000 pipes and used 65,400 pounds of PVC. The total cost for materials was $123,500. What is Bulk’s materials price variance for June?
Bulk’s materials price variance for June is:
a. $650 favorable
b. $106 favorable
c. $650 unfavorable
d. $106 unfavorable
Bulk's materials price variance for June is $0.
Explanation: To calculate Bulk's materials price variance for June, we need to compare the standard cost per unit of PVC with the actual cost per unit of PVC used and multiply it by the actual quantity used.
Given:
Standard cost per unit of PVC: $1.89
Actual cost per unit of PVC used: $123,500 / 65,400 pounds = $1.89
Actual quantity used: 65,400 pounds
Materials Price Variance = (Standard Cost per Unit - Actual Cost per Unit) x Actual Quantity Used
Materials Price Variance = ($1.89 - $1.89) x 65,400 pounds
Materials Price Variance = $0 x 65,400 pounds
Materials Price Variance = $0
Therefore, Bulk's materials price variance for June is $0.