TB MC Qu. 10-32 Suver Corporation has a standard ...
Suver Corporation has a standard costing system. The following data are available for June:
Actual quantity of direct materials purchased | 60,000 | pounds | |
Standard price of direct materials | $ | 2.00 | per pound |
Material price variance | $ | 6,000 | Unfavorable |
Material quantity variance | $ | 3,000 | Favorable |
The actual price per pound of direct materials purchased in June was:
Multiple Choice
$1.88 per pound
$2.00 per pound
$2.10 per pound
$2.12 per pound
Answer : Option C, $2.10 per pound
Explanation :
Given,
standard price = 2 per pound ,
Actual Quantity = 60,000 pounds,
Material price Variance = 6,000 (unfavorable)
That implies,
(standard price- actual price) × Actual quantity = -$6,000
(SP - AP) × AQ = - $6,000
SP × AQ (-) AP × AQ = - $6,000
$2 × 60,000 (-) AP × 60,000 = -$6,000
$1,20,000 (-) AP × 60,000 = - $6,000
AP × 60,000 = $1,20,000 + $6,000
AP = $1,26,000 ÷ 60,000
AP = $2.10 per pound
Therefore,
Actual price per pound of direct material = $2.10.
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