Problem 11-4A (Part Level Submission) Kansas Company uses a standard cost accoun
ID: 2459028 • Letter: P
Question
Problem 11-4A (Part Level Submission) Kansas Company uses a standard cost accounting system. In 2014, the company produced 28,500 units. Each unit took several pounds of direct materials and 1.6 standard hours of direct labor at a standard hourly rate of $12.00. Normal capacity was 50,160 direct labor hours. During the year, 130,800 pounds of raw materials were purchased at $0.92 per pound. All materials purchased were used during the year. LINK TO TEXT Collapse question part (a) If the materials price variance was $2,616 favorable, what was the standard materials price per pound? (Round answer to 2 decimal places, e.g. 2.75.)
A) Standard materials price per pound $
Explanation / Answer
Answer:
Calculation of Standard Materials price per pound
Material Price Variance is given in the question. Material Price Variance is the different between Standard Price and Actual Price used to purchase the raw material quantity. Here Raw Material quantity is taken as Actual Raw Material Purchased Quantity.
Material Price Variance = Actual Quantity Purchased (Standard Price per pound - Actual Price per pound) = $2,616
130,800 (Standard Price - $0.92) = $2,616
130,800 x Standard Price - $120,336 = $2,616
Standard Material Price per pound = $122,952 / 130,800 = $0.94
Part B
Material Quantity Variance is the difference between Standard and Actual quantity used in production at Standard Price..
Material Quantity Variance = Standard Price per Unit (Standard Quantity – Actual Quantity) = - $7,755
$0.94 (Standard Quantity – 130,800) = - $7,755
$0.94 x Standard Quantity - $122,952 = - $7,755
Standard Quantity = $115,197 / 0.94 = 122,550
Standard Material quantity to be used for actual production = 122,550 Pounds
Actual Production = 28,500 units
Standard Material Quantity Per Unit = 122,550 / 28,500 = 43 Pounds