Berry Inc. completed operations for the week and the account was preparing to ma

Question

Berry Inc. completed operations for the week and the account was preparing to make journal entries necessary to prepare a set of interim financial statements. Unfortunately, she discovered some of the data concerning direct materials had been lost. She was able to find the following Effieiency variance $          4,500 U Standard price $                10 per unit Actual units purchased              9,000 units Inventory decrease              1,000 units Budget variance $             900 F Required: Calculate (a) The actual direct materials price per unit paid (b) The standard cost of direct materials used ( c) The standard quantity of direct materials allowed for the month Berry Inc. completed operations for the week and the account was preparing to make journal entries necessary to prepare a set of interim financial statements. Unfortunately, she discovered some of the data concerning direct materials had been lost. She was able to find the following Effieiency variance $          4,500 U Standard price $                10 per unit Actual units purchased              9,000 units Inventory decrease              1,000 units Budget variance $             900 F Required: Calculate (a) The actual direct materials price per unit paid (b) The standard cost of direct materials used ( c) The standard quantity of direct materials allowed for the month

Explanation / Answer

(a) The actual direct materials price per unit paid

Budget variance = (Actual Price- Standard Price)*Actual units purchased

-900 = (Actual Price - 10)*9000

Actual Price = 10 -900/9000

Actual Price = 9.90

Answer

The actual direct materials price per unit paid $ 9.90

(b) The standard cost of direct materials used

Actual Unit used = Actual units purchased + Inventory decrease

Actual Unit used = 9000 + 1000

Actual Unit used = 10000

standard cost of direct materials used = Actual Unit used* standard rate

standard cost of direct materials used = 10000*10

standard cost of direct materials used = $ 100000

( c) The standard quantity of direct materials allowed for the month

Actual Unit used = Actual units purchased + Inventory decrease

Actual Unit used = 9000 + 1000

Actual Unit used = 10000

Effieiency variance = (Standard Quantity - Actual Quantity Used) * Standard Price

-4500 = (Standard Quantity - 10000)*10

Standard Quantity = 10000 - 4500/10

Standard Quantity = 9550 Units

Answer

standard quantity of direct materials allowed for the month = 9550 Units

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