Answer:
= $0.8 per unit
Explanation:
The question is to determine the Actual price paid for a gallon of direct material
This is answered in the following steps
Step 1) What is the standard Quantity allowed?
= Finished units of products x the manufacturing standard
= 13,000 units x 5 gallons = 65,000
What is the actual quantity consumed = 61,000 gallons
Meaning the Material Quantity variance =
Standard Quantity allowed - Actual Quantity used = 65,000 - 61,000
= 4000
Step 2) Determine the Standard Price
= The disclosed material QUantity Variance/ The determined material Quantity Variance
= 2800F/ 4,000
= 0.7 per unit
Step 3) Determine Material Price Variance
= Actual Quantity (Standard Price - Actual Price
= $6,100u = 61,000 (0.7 - Actual Quantity)
= $0.8 per unit
