Topaz Company makes one product and has set the following standards for material

Question

Topaz Company makes one product and has set the following standards for materials and labor:

During the past month, the company purchased 6,700 pounds of direct materials at a cost of $17,085. All of this material was used in the production of 1,300 units of product. Direct labor cost totaled $24,750 for the month. The following variances have been computed:

Compute the standard price per pound for materials. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Compute the standard quantity allowed for materials for the month%u2019s production. (Round your intermediate calculation to 2 decimal places.)

Compute the standard quantity of materials allowed per unit of product. (Round your answer to 2 decimal places.)

Compute the actual direct labor cost per hour for the month. (Round your answer to 2 decimal places.)

Compute the labor rate variance. (Do not round intermediate calculations. Round your answer to the nearest dollar. Indicate the effect of variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Input all amounts as positive values. Leave no cells blank - be certain to enter "0" wherever required.)

Direct Materials Direct Labor   Standard quantity or hours per unit ? pounds 2.50    hours   Standard price or rate ? per pound $ 8.50    per hour   Standard cost per unit ? $ 21.25   

Explanation / Answer

Topaz Company makes one product and has set the following standards for materials and labor:

Direct Labor
Standard hours per unit $2.10 hours
Standard rate $8.50 per hour
Standard cost per unit $17.85

During the past month, the company purchased 6,700 pounds of direct materials at a cost of $18,090. All of this material was used in the production of 1,100 units of product. Direct labor cost totaled $16,290 for the month. The following variances have been computed:


Materials quantity variance $ 1,180 U
Total materials spending variance $ 495 F
Labor efficiency variance $ 4,250 F

I have already calculated that the standard price per pound is 2.95 and the standard quantity for the month should have been 6300 pounds, but I can't figure out what the standard quantity per unit is. I thought it should just be 6300/1100 units, but the computer keeps saying that I am wrong, and i dont know why. Can anybody help me figure out the standard price per unit?

ANS)

Standard cost per pound is 2.7739.
Actual cost of 18,090 / 6,700# = 2.70.
Spending Variance 495 F means standard cost of 6,700 # was 18,090 + 495, or 18,585, or 2.7739

Quantity variance was 1,180 U, or 425.4 #
Standard quantity must have been 6,274.6 at stnd cost of 17,405 vs actual 6,700 # at standard of 18,585, an unfavorable 1,180

Standard quantity per unit was 6,274.6# / 1,100 = 5.7 # x 2.7739 = $15.81 DM per unit

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