Reference no: EM132561622

Materials Variance Analysis.

Because it is concerned about high inventory carrying costs, Carlton Company follows the just-in-time inventory philosophy and treats increases in materials inventory as unfavorable variances and decreases as favorable variances. The company uses a standard cost system and inventories its materials at standard cost. The standard cost per unit of part R-33 is $ 22.50. During the current month, 5,000 unit of R-33 were purchased at a total cost of $ 110,000. In addition, 4,400 units of part R-33 were issued to production during the month; however, the standard quantity allowed for actual production is 4,300 units.

Required:

Question 1: Compute the material purchase price variances, indicating whether the variances are favorable or unfavorable.