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 3,700 lbs. OWN :- Actual unit price of direct materials Units of finished product manufactured $4.5 per Ib. 1,780 units Standard direct materials per unit of finished product 2 lbs. Direct materials quantity variance-unfavorable $658 Direct materials price variance-favorable $740 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

Product finished = 1,780 units Standard finished product for direct materials used = 3,700/2 = 1,850 units Deficiency of finished product for materials used = Product finished - Standard finished product for direct material used Deficiency of finished product for materials used = 1,850-1,780 Deficiency of finished product for materials used = 70 units Standard cost for direct materials = Direct materials quantity variance/Defieciency of finished product Standard cost for direct materials = $658/70 Standard cost for direct materials = $9.4 per unit