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Refer to the Exhibit.
Fabex Ltd manufactures a household detergent called "Clear". The standard data for one of the chemicals used in production (chemical XTC) is as follows:
(a) 50 litres used per 100 litres of 'Clear' produced
(b) Budgeted monthly production is 1000 litres of 'Clear'.
The closing inventory of chemical XTC for November valued at standard price was as follows:
Actual results for the period during December were as follows:
(a) 500 litres of chemical XTC was purchased for 1300.
(b) 550 litres of chemical XTC was used.
(c) 900 litres of 'Clear' was produced.
It is company policy to extract the material price variance at the time of purchase.
What is the total direct material price variance (to the nearest whole number)?
Suggested Answer: C
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36 comments · newest first
CH
Christiane
11 months ago
1300 for 500 litres? That seems way too high!
LA
Lashandra
11 months ago
Definitely 55 adverse based on the numbers.
LA
Laurena
11 months ago
Wait, how did they use 550 litres but only produce 900 litres?
CR
Cruz
12 months ago
I think the variance is 50 adverse.
JO
Jonell
12 months ago
The standard usage is 50 litres for 100 litres of 'Clear'.
DO
Dominga
1 year ago
I believe the total direct material price variance is based on the difference between what we paid and what we expected to pay. I just need to double-check my calculations.
SK
Skye
1 year ago
I'm a bit confused about how to handle the closing inventory in this scenario. Did we include that in the variance calculation?
FE
Fernanda
1 year ago
I think we did a similar question where we had to find the price variance based on actual and standard costs. I hope I can apply that here.
GL
Glen
1 year ago
I remember we calculated material price variances in class, but I'm not sure if I got the formula right for this one.
VA
Vallie
1 year ago
Whoa, this is a lot of information to process. I better take my time and make sure I understand each part before jumping into the calculations. Don't want to make any silly mistakes on the exam.
MO
Moira
1 year ago
Okay, I think I've got a handle on this. I just need to calculate the standard cost, actual cost, and the difference between them to find the price variance. Shouldn't be too tricky.
JA
Jamal
1 year ago
Hmm, I'm a bit confused by all the different numbers and calculations involved here. I'll need to carefully work through each step to make sure I don't miss anything.
HE
Helaine
1 year ago
This looks like a standard material price variance calculation question. I'll need to find the standard price, actual price, and usage to determine the variance.
VE
Vernice
1 year ago
Hmm, I'm not totally sure about this one. I'm debating between B. Portfolio and C. Proportionality. I'll have to think it through carefully.
JU
Julio
1 year ago
This looks like a straightforward question about Kubernetes isolation options. I think I can handle this one.
PA
Page
1 year ago
Ah, this is a good one. Keeping up with organizational challenges will help me provide more credible input during discussions with other business units. I've got a solid strategy for this.
JO
Jordan
1 year ago
I'm a bit confused by the IPv6 addressing used in the options. I'll need to double-check my understanding of IPv6 routing before I can confidently select the right answer.
AR
Argelia
1 year ago
Easy, this is definitely False. The Project Browser has robust filtering and grouping capabilities that let you customize the view based on your needs.
EL
Elouise
1 year ago
Wait, so they're asking us to figure out the price of a chemical I can barely pronounce? This exam is like a scavenger hunt for accountants!
AN
Angelica
1 year ago
C) 55 adverse
DO
Dong
1 year ago
B) 50 favourable
DA
Daryl
1 year ago
A) 50 adverse
ED
Eden
1 year ago
Ah, the joys of material price variance calculations. I'm going to say A) 50 adverse. Gotta love it when the textbook examples come to life, right?
RO
Roxane
1 year ago
I'm going to go with C) 55 adverse.
AD
Adell
1 year ago
I agree with you, I also think it's B) 50 favourable.
NY
Nydia
1 year ago
I think it's B) 50 favourable.
CH
Charlena
2 years ago
Hey, I've got it! The answer is D) 55 favourable. I mean, who doesn't love a good bargain on their cleaning supplies? Fabex Ltd must have some seriously savvy purchasing agents.
KA
Kattie
1 year ago
I wish I could get such good deals on my household supplies. Fabex Ltd is definitely on top of their game.
LA
Lashon
1 year ago
Definitely! It shows that they are managing their costs effectively. Good for them!
RE
Reynalda
1 year ago
I agree, getting a favourable variance is always a good thing. Fabex Ltd must be doing something right.
DE
Deandrea
1 year ago
Great job! You're right, D) 55 favourable is the correct answer. It's always nice to save some money on materials.
DE
Deeanna
2 years ago
Hmm, this one's tricky. I'm going to go with B) 50 favourable. It seems like the company is trying to trick us with all the details, but I'm sticking to my gut on this one.
NI
Nilsa
2 years ago
I think the correct answer is C) 55 adverse. The standard price for chemical XTC is not given, so we need to calculate the price variance based on the actual purchase price of 1300 and the standard price, which we can derive from the given information.
MO
Mozelle
2 years ago
I'm not sure, but I think it might be C) 55 adverse because the actual price paid was higher than the standard price.
NA
Nada
2 years ago
I agree with Herminia, because the actual price paid for the chemical was lower than the standard price, resulting in a favourable variance.
HE
Herminia
2 years ago
I think the answer is B) 50 favourable.