Question

Standard Direct Materials Cost per Unit from Variance Data The following data relating to direct materials cost for October of the current year are taken from the records of Good Clean Fun Inc., a manufacturer of organic toys: Quantity of direct materials used 7,300 lbs. Actual unit price of direct materials $5.9 per lb. Units of finished product manufactured 1,755 units Standard direct materials per unit of finished product 4 lbs. Direct materials quantity variance—unfavorable $1,680 Direct materials price variance—favorable $730 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. If required, round your standard cost per unit answer to two decimal places. Product finished units Standard finished product for direct materials used units Deficiency of finished product for materials used units Standard cost for direct materials $ per unit

Answer 1

Solution:

Product finished		1,755 units
Standard finished product for direct materials used	(7,300/4)	1,825 units
Deficiency of finished product for materials used	(1,825 - 1,755)	70 units
Standard cost for direct materials	(6*4)	$24 per unit

Working:

Direct material price variance = (Standard price of material - Actual price of material) * Actual material used.

substitute the values,

$730 = (standard price - $5.9) * 7,300

$730 = 7,300 Standard price - $43,070

7,300 Standard price = $43,070 + $730

Standard price = $43,800 / 7,300

Standard price = $6