Question

Whiplash Ltd. makes a single product and only one type of direct material is used to make this product. Whiplash uses a standard costing system and has provided the following data concerning the production of output in July: Actual number of units of output produced 7,800 units Materials quantity variance $2,609 Favorable (F) Materials spending variance $3,744 Favorable (F) Standard amount of materials used per unit of output 5.0 grams per unit Actual total materials purchased/used 37,830 grams Actual price per gram purchased/used $2.20 per gram Assume there were no beginning or ending inventories of direct materials. The standard price per gram for Whiplash, Ltd. is closest to:

Answer 1

Answer:

The standard price per gram for Whiplash, Ltd. is closest to $2.23 per gram

Explanation:

In order to calculate the The standard price per gram for Whiplash, Ltd we would have to use the following formula:

Material quantity variance=(standard quantity-Actual quantity)×standard price

$2,609=(5 grams×7,800-37,830)×standard price

$2,609=(39,000-37,830)×standard price

$2,609=1,170 grams×standard price

standard price=$2,609/1,170 grams

standard price=$2.23 per gram

The standard price per gram for Whiplash, Ltd. is closest to $2.23 per gram

Answer 2

Answer:

$2 per gram.

Explanation:

We are given the following parameters in the question above; the production of output in July: Actual number of units of output produced = 7,800 units, the Materials quantity variance = $2,609, the favorable (F) Materials spending variance = $3,744, the Favorable (F) Standard amount of materials used per unit of output = 5.0 grams per unit , the Actual total materials purchased/used = 37,830 grams and the Actual price per gram purchased/used = $2.20 per gram.

(37,830 × standard price) - (37,830 × 2.2 ) =$3,744.

Thus, (37,830 × standard price) = 79482.

Approximately, standard price = $2 per gram