You have been given the following list of variances for the Pennadi Company: Dir

Question

You have been given the following list of variances for the Pennadi Company: Direct materials price variance Direct materials quantity variance Direct labour rate variance Direct labour efficiency variance Variable overhead spending variance Variable overhead efficiency variance Fixed overhead budget variance Fixed overhead volume variance $17,700 U 11,200 U 4,370 F 30,000 U 3,000 U 5,800 U 4,800 U 45,800 F You have also been given the following information Actual units produced Budgeted units of production (normal volume) Standard labour-hours for actual output Standard material units for actual output Actual direct labour costs Actual cost of direct materials 28,000 24,000 14,000 380,000 $235,630 $430,700 Overhead is applied using direct labour-hours. Variable overhead is applied at the rate of $12 per direct labour-hour. The materials purchase price was $0.730.(Attempt the following questions in the order listed.) Required: 1. What was the actual number of units of direct materials purchased? Number of units 2. What was the standard cost of the actual number of units of direct materials purchased and the standard price of direct materials? (Round your answer to 2 decimal places.) Standard cost 3. What cost for direct materials will be reported in the flexible budget? lexible budget 4. What is the standard cost of direct materials used in production? rd cost of direct materials 5. How much direct materials were consumed in production? irect materials units

Explanation / Answer

1)Actual units of direct material purchased = Actual cost of direct material /material purchase price per unit

             = 430700/.730

              = 590000 units

2)Material purchase price := AQ[AR-SR]

   17700 = 590000[.730 - SR]

   17700/590000 = .730-SR

     SR = .730 - .03

            = $ .70 per unit

3)Direct material reported in flexible budget =standard quantity of material used for actual production *SR

        = 380000*.70

         = $ 266000

4)Standard cost of material used   :AQ*SR

              = 590000*.70

               = $ 413000

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

---

---

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