December EX 22-6 Standard direct materials cost per unit from variance data The

Question

December EX 22-6 Standard direct materials cost per unit from variance data The following data relating to direct materials cost for October of the from the records of Good Clean Fun Inc., a manufacturer of organic toys: Obj, 2,3 current year are taken Quantity of direct materials used Actual unit price of direct materials Units of finished product manufactured Standard direct materials per unit of finished product Direct materials quantity variance-unfavorable Direct materials price variance-unfavorable 3,000 lbs. $5.50 per lb 1,400 units 2 lbs. $1,000 $1,500 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.

Explanation / Answer

Solution:

Calculation of Standard direct materials cost per unit

We can calculated this part from the material quantity variance

Standard Quantity for actual production = Actual Units Produced 1400 Units x Standard Direct material per unit required 2 lbs = 2800 lbs

Material Quantity Variance = (Actual material Used – Standard Quantity for Actual Production) x Standard price per unit

$1,000 Unfavorable = (3000 – 2800) x Standard Price per unit

$1,000 = 200 x Standard Price Per Unit

Standard Price Per Unit = $1000 / 200 = $5 per unit

Standard Direct Material Cost Per LBS = $5 per unit

Standard Direct material cost per unit of finished product = 1 Finished Product Required 2 LBS of direct material x Std Unit Cost per LBS $5 = 2*5 = $10 per unit of finished product

Standard Direct material cost per unit of finished product = $10 per unit

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