Kansas Company uses a standard cost accounting system. In 2014, the company prod
ID: 2426511 • Letter: K
Question
Kansas Company uses a standard cost accounting system. In 2014, the company produced 27,900 units. Each unit took several pounds of direct materials and 1.6 standard hours of direct labor at a standard hourly rate of $13.00. Normal capacity was 50,390 direct labor hours. During the year, 131,700 pounds of raw materials were purchased at $0.90 per pound. All materials purchased were used during the year.
(a)
Kansas Company uses a standard cost accounting system. In 2014, the company produced 27,900 units. Each unit took several pounds of direct materials and 1.6 standard hours of direct labor at a standard hourly rate of $13.00. Normal capacity was 50,390 direct labor hours. During the year, 131,700 pounds of raw materials were purchased at $0.90 per pound. All materials purchased were used during the year.
Explanation / Answer
Material Price Variance=AQ consumed×(Standard Price-actual Price)
Let Standard Price be X
$1,317=131,700(X-$0.90)
$1,317=131,700*X-131,700*0.90
$1,317=131,700*X-$118,530
X = $0.91
Therefore, Standard Price = $0.91 per unit (Answer)
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