Question 11 2 pts Famous Agnes\' Cookies produces cookies for resale at grocery

Question

Question 11 2 pts Famous Agnes' Cookies produces cookies for resale at grocery stores in Florida. In Agnes' master budget, figures indicate that the company expects to use 2.5 pounds of direct materials for each unit produced at a cost of $5.00 per pound (one unit - one batch of rolls). Each unit produced will require 0.30 direct labor hours at a cost of $12.00 per hour. Variable manufacturing overhead is applied based on direct labor hours at a rate of $2.40 per hour. Last year's sales were expected to total 40,000 units Agnes just received last year's actual results showing sales of 35,000 units. What is the standard cost per unit for direct materials? o $5.00 $0.50 o $2.00 o $12.50 4 Previous Next

Explanation / Answer

Question 11

Hence, Option (iv) is correct answer.

Solution for Question 12

Flexible Budget on the basis of Actual units sold i.e. 35000 units will be calculated as under:

As evident from the question, there is no change in price of Material & consumption quantity of material for production of 1 unit of finished goods.

Hence, Revised Budget for 35000 units will be = 35000 x $ 12.50 = $ 437,500

Hence, Option (iv) is correct answer

Particulars Units Unit of Measure Rate Amount Material Required per unit 2.5 Pound $5.00 $12.50 Direct Labour 0.3 Hours $12.00 $3.60 Variable Manufacturing overhead 0.3 Hours $2.40 $0.72 Budgeted Sales 40000 Units Actual Sales 35000 Units

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