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PA4. LO 8.2April Industries employs a standard costing system in the manufacturing of its sole product,...

PA4.

LO 8.2April Industries employs a standard costing system in the manufacturing of its sole product, a park bench. They purchased 60,000 feet of raw material for $300,000, and it takes 5 feet of raw materials to produce one park bench. In August, the company produced 10,000 park benches. The standard cost for material output was $100,000, and there was an unfavorable direct materials quantity variance of $6,000.

  1. What is April Industries’ standard price for one unit of material?
  2. What was the total number of units of material used to produce the August output?
  3. What was the direct materials price variance for August?
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Answer #1
A April Industries' standard price for one unit of material 5 =300000/60000
B Total number of units of material used to produce the August output 51200 Direct Material Quantity Variance =(Standard Quantity -Actual Quantity)*Standard Rate
-6000 =(50000-Actual Quantity)*5
-6000 =250000-(Actual Quantity*5)
-256000 =-5Actual Quantity
Actual Quantity =256000/5
C Direct Material Price Variance for August 156160 Direct Material Price Variance =(Standard Price - Actual Price)*Actual Quantity
=(5-Actual Price)*51200
=(5-1.95)*51200
where Actual Price =100000/51200
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