Standard Quantity Standard Price Standard Rate Direct Materials 3 feet $5 per fo

Question

Standard Quantity Standard Price Standard Rate

Direct Materials 3 feet $5 per foot $15

     During March, the company purchased direct materials at a cost of $55,650, all of which were used in the production of 3,200 units of product. In addition, 4,900 hours of direct labor time were worked on the product during the month. The cost of this labor time was $36,750. The following variances have been computed for the month:

Materials quantity variance: $4500 U

Labor spending variance$1,650F  

  Labor efficiency variance$800U

How do I find the actual cost per foot for materials in March?

     During March, the company purchased direct materials at a cost of $55,650, all of which were used in the production of 3,200 units of product. In addition, 4,900 hours of direct labor time were worked on the product during the month. The cost of this labor time was $36,750. The following variances have been computed for the month:

Materials quantity variance: $4500 U

Labor spending variance$1,650F  

  Labor efficiency variance$800U

How do I find the actual cost per foot for materials in March?

Explanation / Answer

Materials quantity variance = (Actual quantity - Standard Quantity) x Standard price

Where,

Materials quantity variance = $4,500

Standard quantity = 3,200 x 3 feet = 9,600 feet

Standard price = $5 per foot

Therefore,

$4,500 = (Actual quantity - 9,600) x $5

Or,

Actual quantity = 10,500 feet

Also,

Cost of actual quantity of direct materials purchased and used = $55,650

Therefore,

Actual cost per foot of materials = $55,650 / 10,500 feet = $5.30

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.