Problem 23-4A Kansas Company uses a standard cost accounting system. In 2014, th
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Question
Problem 23-4A Kansas Company uses a standard cost accounting system. In 2014, the company produced 28,200 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 49,860 direct labor hours. During the year, 131,400 pounds of raw materials were purchased at $0.96 per pound. All materials purchased were used during the year If the materials price variance was $2,628 favorable, what was the standard materials price per pound? (Round answer to 2 decimal places, e.g. 2.75.) Standard materials price per pound LINK TO TEXT LINK TO TEXT If the materials quantity variance was $1,646 unfavorable, what was the standard materials quantity per unit? (Round answer to 1 decimal places, e.g. 1.5.) Standard materials quantity per unit LINK TO TEXT LINK TO TEXTExplanation / Answer
1
Calculation of Standard Material Price Per Pound:
Given:
Material Price variance = $2628 Favorable = -2628
Formula :
Material Price variance = (Actual Price - Standard Price) * Actual Quantity
Actual Price Per Pound = $0.96
Actual Quantity = 131400 Pounds
Hence,
- 2628 = (0.96 - Standard Price ) *131400
- 2628 / 131400 = 0.96 - Standard Price
- 0.02 = 0.96 - Standard Price
Standard Price = 0.96 + 0.02 = $0.98 Per Pound
Standard Price = $0.98 Per Pound
2
Calculation of Standard Material Quantity per unit:
Given:
Material Quantity Variance = $ 1646 Unfavorable = 1646
Formula:
Material Quantity Variance = (Actual Quantity - Standard Quantity) * Standard Price
Actual Quantity = 131400 Pounds
Standard Price Per Pound = $0.98
1646 = (131400- Standard Quantity ) * 0.98
1646 / 0.98 = (131400- Standard Quantity )
1680 = 131400- Standard Quantity
Standard Quantity = 131400-1680 = 129720 Pounds
Standard Quantity Per unit = 129720 Pounds / 28200 Units = 4.60 Pounds Per Unit
3
Calculation of Standard hours Allowed:
Formula :
Standard hours Allowed = Actual Units Produced * Standard hours per unit
Standard hours Allowed = 28200 Units * 1.60 hours
Standard hours Allowed = 45120 hours
4
Calculation of Direct Labor Hours Worked:
Given :
Labor Quantity variance = $7540 Unfavorable = 7540
Formula :
Labor Quantity variance =(Actual Hours - Standard hours )* Standard Rate
Standard hours = 45120 Hours
Standard Rate = $1.60 Per Hour
7540 = (Actual hours - 45120) *1.60
4712.50 = Actual hours - 45120
Actual hours Worked = 4712.50 + 45120 = 49832.50 Hours
1
Calculation of Standard Material Price Per Pound:
Given:
Material Price variance = $2628 Favorable = -2628
Formula :
Material Price variance = (Actual Price - Standard Price) * Actual Quantity
Actual Price Per Pound = $0.96
Actual Quantity = 131400 Pounds
Hence,
- 2628 = (0.96 - Standard Price ) *131400
- 2628 / 131400 = 0.96 - Standard Price
- 0.02 = 0.96 - Standard Price
Standard Price = 0.96 + 0.02 = $0.98 Per Pound
Standard Price = $0.98 Per Pound
2
Calculation of Standard Material Quantity per unit:
Given:
Material Quantity Variance = $ 1646 Unfavorable = 1646
Formula:
Material Quantity Variance = (Actual Quantity - Standard Quantity) * Standard Price
Actual Quantity = 131400 Pounds
Standard Price Per Pound = $0.98
1646 = (131400- Standard Quantity ) * 0.98
1646 / 0.98 = (131400- Standard Quantity )
1680 = 131400- Standard Quantity
Standard Quantity = 131400-1680 = 129720 Pounds
Standard Quantity Per unit = 129720 Pounds / 28200 Units = 4.60 Pounds Per Unit
3
Calculation of Standard hours Allowed:
Formula :
Standard hours Allowed = Actual Units Produced * Standard hours per unit
Standard hours Allowed = 28200 Units * 1.60 hours
Standard hours Allowed = 45120 hours
4
Calculation of Direct Labor Hours Worked:
Given :
Labor Quantity variance = $7540 Unfavorable = 7540
Formula :
Labor Quantity variance =(Actual Hours - Standard hours )* Standard Rate
Standard hours = 45120 Hours
Standard Rate = $1.60 Per Hour
7540 = (Actual hours - 45120) *1.60
4712.50 = Actual hours - 45120
Actual hours Worked = 4712.50 + 45120 = 49832.50 Hours
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