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 3,000 lbs. Actual unit price of direct materials $5.50 per lb. Units of finished product manufactured 1,400 units Standard direct materials per unit of finished product 2 lbs. Direct materials quantity variance—unfavorable $1,000 Direct materials price variance—unfavorable $1,500 Determine the standard direct materials cost per unit of finished product

Answer 1

Answer:

The standard cost is $5 per lbs

each units uses 2 lbs, so the unit stadard cost is $10

Explanation:

Volume variance

$(standard\:quantity-actual\:quantity) \times standard \: cost = DM \: efficiency \: variance$

std quantity                   2800.00  (1,400 units times 2 pounds per unit)

actual quantity           3000.00

std cost                                     ??

$(2,800-3,000) \times standard \: cost = -1,000$

difference                     -200.00

efficiency variance        $(1,000.00)

-200 x Std cost = -1,000

Standard cost = -1,000/-200 = 5

The standard cost is $5 per lbs

each units uses 2 lbs, so the unit stadard cost is $10