Standard Direct Materials Cost per Unit from Variance Data The following data re

Question

Standard Direct Materials Cost per Unit from Variance Data The following data relating to direct materials cost for October of the current year are taken from the records of Good Clean Fun Inc., a manufacturer of organic toys: Quantity of direct materials used Actual unit price of direct materials Units of finished product manufactured Standard direct materials per unit of finished product 2 lbs Direct materials quantity variance-unfavorable Direct materials price variance-favorable Determine the standard direct materials cost per unit of finished product, assuming that there was no inventory of work in process at either the beginning or the end of the month. If required, round your standard cost per unit answer to two decimal places Product finished Standard finished product for direct materials used Deficiency of finished product for materials used Standard cost for direct materials 3,400 lbs $3.8 per lb. 1,630 units $560 $680 Ounits X units X units per unit

Explanation / Answer

Answer

Standard direct materials per unit of finished products = 2 lbs
Actual material used = 3400 lbs.

Hence, standard finished product = 3400 lbs / 2 lbs =1700 units

Deficiency of finished products for material used = Standard finished units – Actual produced units = 1700 units – 1630 units = 70 units

Direct material price variance = (Standard rate – Actual rate) x Actual quantity of direct material used

$680 = (Standard rate[SR] - $3.8 per lbs) x 3400 lbs
680 = 3400SR – 12920
680 + 12920 = 3400SR
13600/3400 = Standard Rate
Standard cost for direct materials = $4 per unit

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