Answer:
Oakwood Inc.
a) The actual price paid per board foot purchased is:
= $7.34
b) The standard quantity of materials allowed (in board feet) for the number of units produced is:
= 36,740 board feet
c) The direct materials usage variance is:
= $140,328 F
Explanation:
a) Data and Calculations:
i) Reported production of American Oak Armchairs:
Units produced = 1,670 armchairs
Direct materials purchased = 18,500 board feet
Direct materials issued into production = 17,250 board feet
ii) Standard cost per unit
(22 board feet × $7.2) $158.4 per unit produced
Purchase price variance $2,620
a) The actual price paid per board foot purchased
= Standard cost per board feet + (Purchase price variance/Quantity purchased)
= $7.20 + ($2,620/18,500)
= $7.20 + $0.14
= $7.34
b) The standard quantity of materials allowed (in board feet) for the number of units produced
= 22 * 1,670
= 36,740 board feet
c) The direct materials usage variance = (Standard Qty - Actual Qty) * Standard price per board feet
= (36,740 - 17,250) * $7.20
= $140,328 F
