Standard Direct Materials Cost per Unit from Variance Data The following data re

Question

Standard Direct Materials Cost per Unit from Variance Data

The following data relating to direct materials cost for October of the current year are taken from the records of Good Clean Fun Inc., a manufacturer of organic toys:

Determine the standard direct materials cost per unit of finished product, assuming that there was no inventory of work in process at either the beginning or the end of the month. If required, round your standard cost per unit answer to two decimal places.

Quantity of direct materials used 3,000 lbs. Actual unit price of direct materials $5.50 per lb. Units of finished product manufactured 1,400 units Standard direct materials per unit of finished product 2 lbs. Direct materials quantity variance—unfavorable $1,000 Direct materials price variance—unfavorable $1,500

Explanation / Answer

Answer: a. Product finished                      1,400 Units b. Standard finished for direct material used =Quantity of direct material used/Standard direct material per unit of finised product (3000/2) 1500 Units c. Deficiency of finished product for material used =Product finished - Standard finished for direct material used =1,500- 1,400 Units 100 Units d. Standard cost for direct material =Direct material variance/Deficiency of finished product for direct material used =$1,000/100 units $                  10.00

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