Standard Direct Materials Cost per Unit from Variance Data The following data re
ID: 2531327 • Letter: S
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:
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.
Quantity of direct materials used 5,400 lbs. Actual unit price of direct materials $3.8 per lb. Units of finished product manufactured 2,590 units Standard direct materials per unit of finished product 2 lbs. Direct materials quantity variance—unfavorable $880 Direct materials price variance—favorable $1,080Explanation / Answer
Answers
Standard direct material per unit of finished goods = 2 lbs
Finished Goods = 2590 units
Standard direct material = 2590 units x 2 lbs = 5180 lbs
Direct materials price variance = (Standard price of material – Actual price of material) x Actual material used
Direct material price variance = $1080 Favourable.
Hence,
1080 = (Standard price - $3.8 per lb) x 5400 lbs
1080 = 5400SP – 20520
1080 + 20520 = 5400SP
Standard Price (SP) = 21600/5400
Standard price per lb = $4
Product finished
2590 units
Standard finished products for direct material used
[5400 lbs / 2 lbs]
2700 units
Deficiency of finished product for material used
[2700 - 2590]
110 units
Standard cost for direct materials
[$4 per lbs (Working 2) x 2 lbs]
$ 8 per unit
Product finished
2590 units
Standard finished products for direct material used
[5400 lbs / 2 lbs]
2700 units
Deficiency of finished product for material used
[2700 - 2590]
110 units
Standard cost for direct materials
[$4 per lbs (Working 2) x 2 lbs]
$ 8 per unit
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