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 3,000 lbs. Actual unit price of direct materials Units of finished product manufactured Standard direct materials per unit of finished product Direct materials quantity variance-unfavorable $5.50 per lb. 1,400 units 2 lbs. $1,000 Direct materials price variance-unfavorable $1,500 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 = 1400 units

Direct material price variance = (Standard direct material price - actual direct material price)*Actual quantity used

-1500 = (Standard direct material price - 5.50)*3000

Standard direct material price = $5 per pound

Standard direct material cost per unit of finished product = $5*2 = $10 per unit