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

Question

Kansas Company uses a standard cost accounting system. In 2014, the company produced 28,300 units. Each unit took several pounds of direct materials and 1.6 standard hours of direct labor at a standard hourly rate of $11.00. Normal capacity was 49,720 direct labor hours. During the year, 130,700 pounds of raw materials were purchased at $0.94 per pound. All materials purchased were used during the year. If the materials price variance was $3,921 favorable, what was the standard materials price per pound?

Explanation / Answer

Material Price Variance =( Std Price - Actual Price )* Std Hours

=( STd price - 0.94)*130700= 3921

= Std Price - 0.94 = 3921/130700

= Std Price = 0.97

Hence standard price per pound is 0.97

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