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Kansas Company uses a standard cost accounting system. In 2014, the company prod

ID: 2426511 • Letter: K

Question

Kansas Company uses a standard cost accounting system. In 2014, the company produced 27,900 units. Each unit took several pounds of direct materials and 1.6 standard hours of direct labor at a standard hourly rate of $13.00. Normal capacity was 50,390 direct labor hours. During the year, 131,700 pounds of raw materials were purchased at $0.90 per pound. All materials purchased were used during the year.

(a)

Kansas Company uses a standard cost accounting system. In 2014, the company produced 27,900 units. Each unit took several pounds of direct materials and 1.6 standard hours of direct labor at a standard hourly rate of $13.00. Normal capacity was 50,390 direct labor hours. During the year, 131,700 pounds of raw materials were purchased at $0.90 per pound. All materials purchased were used during the year.

Explanation / Answer

Material Price Variance=AQ consumed×(Standard Price-actual Price)

Let Standard Price be X

$1,317=131,700(X-$0.90)

$1,317=131,700*X-131,700*0.90

$1,317=131,700*X-$118,530

X = $0.91

Therefore, Standard Price = $0.91 per unit (Answer)