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Zeta Corporation is a manufacturer of sports caps, which require soft fabric. The standards for each cap allow 2.00 yards of soft fabric, at a cost of $2.00 per yard. During the month of January, the company purchased 25,000 yards of soft fabric at $2.10 per yard, to produce 12,000 caps. What is Zeta Corporation's materials price variance for the month of January?

Respuesta :

Answer:

Material Price Variance = $2,500 Unfavorable

Explanation:

Standard fabric for each cap = 2.00 yard

Standard price per yard = $2.00 per yard

Actual price per yard = $2.10

Actual Quantity = 25,000 yards

Materials price variance = (Standard price - Actual Price) [tex]\times[/tex] Actual Quantity

= ($2.00 - $2.10) [tex]\times[/tex] 25,000 = - $0.10 [tex]\times[/tex] 25,000

= - $2,500

Since it is negative in value it is Unfavorable

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