@Beto42392
The problem states you are a purchaser(you are going to produce widgets so you need to buy materials), if you were the seller than an unfavorable price variance would be correct. (See below if needed)
It would probably be best to think of it this way:
You expect prices for materials to be at $20 dollars per unit. Your actual units sold were 11,200 and actual price was $18.5.
First calculate how much you actually paid: (11,200*$18.5)=$207,200. After you recall/analyze what you thought the price would be $20 for “X” amount of units. Think of yourself a everyday consumer focusing on price or savings you want to know how much it was originally.
So you calculate: (11,200*$20)=$224,000 so that means if the price stayed the same as you budgeted or expected you WOULD have payed more ($224,000-207,200)=$16,800.
"Do better to know better."
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