Heims is an automobile manufacturing company. When the sales team in the company gets an order, the information reaches all asso
2 answers:
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Answer:
Actual Price = $5.75 per pound
Explanation:
Provided Actual Usage = 58,000 pounds
Standard = 4 pounds per finished goods,
Provided finished goods = 15,000 units
Standard Raw Material = 15,000 4 pounds = 60,000 pounds
Provided Direct Material Efficiency Variance is Favorable
= (Standard Usage - Actual Usage) Standard Price
= (60,000 - 58,000)Standard Price = $10,500
=2,000 SP = $10,500
Standard Price = $10,500/2,000 = $5.25
Direct Material Price Variance = (Actual Price - Budgeted Price) Actual Quantity
We will calculate Actual Price using the above data,
(Actual Price (AP) - $5.25) 58,000 = $29,000 Unfavorable
As This variance is unfavorable, which means Actual Price is higher than Budgeted Price
AP - $5.25 = $29,000/58,000 = $0.5
Actual Price = $0.5 + $5.25 = $5.75 per pound