Question

TB MC Qu. 10-32 Suver Corporation has a standard ... Suver Corporation has a standard costing...

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

Homework Answers

Answer #1

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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