Kansas Company uses a standard cost accounting system. In 2014, the company prod
ID: 2427789 • 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)
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(b)
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 =Actual quantity * Actual Price-Actual quantity * Standard price
1317=131700*0.90-131700*SP
SP=0.89
Standard Price=0.89 per unit
Material quantity variance=Actual quantity * Standard cost-Standard quantity * Standard cost
3058=131700*0.89-SQ*0.89
SQ=128264
Standard quantity=128264
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