Precilla Company uses a standard costing system that allows 1.70 pounds of direc

Question

Precilla Company uses a standard costing system that allows 1.70 pounds of direct materials for one finished unit. During July, the company purchased 35,000 pounds of direct materials for $181,000 and manufactured 10,000 finished units. The standard direct materials cost allowed for the units manufactured is $107,000. The performance report shows that Pricilla has an unfavorable direct materials usage variance of $4,300. Also, the company records any price variance for materials at time of urchase. The number of pounds of direct materials used to produce July's output was: 17,500 19,500 17,000 17,683 18,183

Explanation / Answer

Answer is 17683

Material Usage Variance = (Standard Qty - Actual Qty) x Standard Rate

-4300 = (10000 x 1.7 - Actual Qty) x 6.29

-4300 = 107000 - Actual Qty x 6.29

Actual Qty = (107000+4300) / 6.29

= 17683 pounds

Standard Rate = Standard Cost / Standard Qty

= 107000 / (10000 x 1.7)

= 6.29

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