Checking uses a standard costing system in the manufacture of its single product

Question

Checking uses a standard costing system in the manufacture of its single product. The 35,000 units of raw material purchased and used cost $105,000 and two units of raw material are required to produce one unit of final product. In March, the company produced 12,000 units of final product. The flexible budget for materials for March was $60,000, and there was an unfavorable static budget variance of $35,000.

1. The number of units of final product planned for March in Chemking's static budget was:

Explanation / Answer

Raw material purchased          35,000 units Cost       105,000 Final product requires two units of raw material Final product produced          12,000 units Flexible budget          60,000 unfavorable budget variance          35,000 The number of units of final product planned for March in Chemking's static budget was Actual cost per unit                    3 Budgetd cost per unit                    2 Total Budget          60,000 Total units          30,000 Final product budget          15,000 units

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