Question

Happinessistheroad Corp. has the following information available regarding its materials: Managers expected to pay $5 per kilogram. Each unit produced should take 2 kilograms; actual total usage was 2,100 kilograms. Finally, the company planned to produce 1,000 units, but only produced 950. The direct materials spending variance is $1,050 (unfavorable). How much did the company pay per kilogram of materials?

Answer 1

Answer:

$5.5= actual price

Explanation:

Giving the following information:

Managers expected to pay $5 per kilogram.

Each unit produced should take 2 kilograms; actual total usage was 2,100 kilograms.

The company produced 950 units.

The direct materials spending variance is $1,050 (unfavorable).

To calculate the actual price per kilogram, we need to use the direct material spending variance.

Direct material price variance= (standard price - actual price)*actual quantity

-1,050= (5 - actual price)*2,100

-0.5= 5 - actual price

5.5= actual price