Question

Based on the following information answer question

Answer 1

1. The standard cost per unit of material is $30 ($10 x 3).

2. The total inputs allowed per budget for actual outputs achieved = 21,000 (3 x 7,000).

3. The total actual direct material used to produce the actual outputs is 28,000 (7,000 x 4).

4. The material price variance = $28,000 Unfavorable ($3 - $4) x 28,000.

5. The material efficiency variance = $21,000 Unfavorable (28,000 - 21,000) x $3.

6. The flexible budget variance = $42,000 Unfavorable (28,000 x $9) - (21,000 x $10).

7. The item that would never appear on a cash budget is the cost of direct material variance.  However, the specific items are not indicated herein.

Data and Calculations:

Standard units of materials allowed = 3 units

Cost of a unit of material =$10

Standard cost direct material per unit of output = $30 ($10 x 3)

Number of units produced = 7,000

Actual direct materials per unit used = 4 units

Total quantities of materials used = 28,000 (7,000 x 4)

Cost of a unit = $9

Actual direct material cost per unit = $36 ($9 x 4)

Total quantities of materials purchased = 30,000

Cost of standard direct materials allowed = $210,000 ($10 x 3 x 7,000)

Cost of actual direct materials used = $252,000 ($9 x 4 x 7,000)

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