Blaster, Inc., manufactures portable radios. Each radio requires 3 units of Part XBEZ52, which has a standard cost of $1.25 per unit. During May, the company purchased 21,300 units of the part for a total of $27,690. Also during May, the company manufactured 5,900 radios, using 18,700 units of part XBEZ52. The direct materials purchases variance is computed when the materials are purchased.

During May, the materials price variance for part XBEZ52 was:

1,065 U

Explanation:

Materials Price Variance = Actual Quantity Purchased * (Standard Price – Actual Price)Actual Price= Total Cost / Quantity Purchased

= ($27,690 /21,300 )=$ 1.3

=21,300* [$1.25 – $1.3]

=21,300*0.05

=1,065 U

During May, the materials price variance for part XBEZ52 was 1,065 which is Unfavourable because the actual

purchase price is higher than standard.

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