A manufacturing company in Lagos sets a standard material cost of ₦450 per kg for Product X, with a standard usage of 4 kg per unit. During March 2024, the company produced 1,200 units, purchased 5,100 kg at ₦430 per kg, and used 4,900 kg in production. What is the Material Price Variance?

Material Price Variance = (Standard Price – Actual Price) × Actual Quantity Purchased = (₦450 – ₦430) × 5,100 kg = ₦20 × 5,100 = ₦102,000 Favourable. The variance is calculated on quantity purchased (5,100 kg), not quantity used, as price variance is recognised at the point of purchase. The favourable outcome arises because the actual price paid was lower than the standard price.