Detailed Answer
Answer (D) is correct. The general formula for the purchase price variance is quantity purchased times (standard price minus actual price). The standard price equals the materials charge per finished unit divided by the number of inputs per finished unit ($16.50 ÷ 3 = $5.50), and the actual price equals the total amount paid for materials purchased (not just used) divided by the number purchased ($583,200 ÷ 108,000 = $5.40). Frisco’s purchase price variance is therefore calculated as follows: [108,000 × ($5.50 – $5.40)] = $10,800 F.