Question

If actual material cost is 900 units at Rs. 12 per unit and standard material cost is 1000 units at Rs. 11 per unit, then the material price variance is

• A. Rs. 900(A)
• B. Rs. 900(F)
• C. Rs. 1000(A)
• D. Rs. 1000(F)

Answer 1

The correct option is A Rs. 900(A)

Material Price Variance is the difference between the standard price of material and actual price of material.

This can be calculated with the below formula:

Material Price Variance=Standard Rate-Actual Rate* Actual Qty

=Rs.11 * 900 - Rs.12 * 900

= Rs.900 (A)