Kennedy Inc. has the following data for its operation in August: Increase in dir

Question

Kennedy Inc. has the following data for its operation in August: Increase in direct materials inventory 110 sets Direct materials purchased (AQ) 1,810 sets Finished good manufactured 800 units Direct materials purchase-price variance $460 favorable Budgeted Finished good to manufacture 910 units Direct materials purchased 2,200 sets Direct materials per unit of finished goods 2 sets Direct materials price per set (SP) $4.00 What was the actual purchase price (AP) per set of direct materials purchased?   $4.00 $4.04 $4.20 $3.75 $4.20

Explanation / Answer

$3.75 Direct material purchase price variance = (Standard price per set - Actual price per set)*Actual quantity of sets purchased = $460(F) $460 = ($4-Actual price per set)*1810 $460 = $7240-1810 actual price per set 1810 actual price per set = $7240-$460 1810 actual price per set = $6780 Actual price per set = $6780/1810 = $3.75

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