Problem:
Actual price per unit of input (per lb ) $ 7.80
Standard price per unit of input (per lb) $ 7.00
Standard inputs allowed per unit of output 10 lbs
Actual units of input 115,000 lbs
Actual units of output (product) 14,400
What is the formula to compute the raw materials price variance?
Compute the company's raw materials price variance. As with all variances, show whether it is favorable or unfavorable.
Explain what the variance means.