Oklahoma Manufacturing Company uses a standard cost accounting system. In 2012,

Question

Oklahoma Manufacturing Company uses a standard cost accounting system. In 2012, the company produced 28,300 units. Each unit took several pounds of direct materials and 1½ standard hours of direct labor at a standard hourly rate of $13.00. Normal capacity was 49,550 direct labor hours. During the year, 130,400 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 $3,912 favorable, what was the standard materials price per pound? (Round answer to 2 decimal places, e.g. 2.75.) Standard materials price per pound $

Please show work!

Explanation / Answer

material price variance = AQ × (AP – SP)=130400*(.94 - SP)

3912 = 130400*(SP-.94)

3912 = 130400SP-130400*94

3912 = 130400SP- 122576

130400SP = 122576-3912

130400SP = 118664

SP = .91

3912 = 130400*(.91-.94)

130400*.03 = 3912

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