Problem 23-4A (Part Level Submission) Kansas Company uses a standard cost accoun

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Problem 23-4A (Part Level Submission)

Kansas Company uses a standard cost accounting system. In 2017, the company produced 27,700 units. Each unit took several pounds of direct materials and 1.6 standard hours of direct labor at a standard hourly rate of $12.00. Normal capacity was 50,400 direct labor hours. During the year, 131,500 pounds of raw materials were purchased at $0.93 per pound. All materials purchased were used during the year.

(a)

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Problem 23-4A (Part Level Submission)

Kansas Company uses a standard cost accounting system. In 2017, the company produced 27,700 units. Each unit took several pounds of direct materials and 1.6 standard hours of direct labor at a standard hourly rate of $12.00. Normal capacity was 50,400 direct labor hours. During the year, 131,500 pounds of raw materials were purchased at $0.93 per pound. All materials purchased were used during the year.

Explanation / Answer

Material price variance = (Standard rate-actual rate)actual quantity

                         2630 = (X-0.93)131500

                         2630 = 131500X-122295

               -131500X      = -124925

X(Standard price per pound) = 0.95

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