Problem 11-4A (Part Level Submission) Kansas Company uses a standard cost accoun
ID: 2459205 • 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 $2616 favorable, what was the standard materials price per pound?
B)If the materials quantity variance was $7,755 unfavorable, what was the standard materials quantity per unit?
C)What were the standard hours allowed for the units produced?
Explanation / Answer
a) Standard Material Price per Pound
Formula:
Material Price Variance = Actual Material Used X ( Standard Rate - Actual Rate)
2616 = 130,800 X ( Standard Rate - $0.92)
2616/130,800 = Standard rate - $ 0.92
0.02 = Standard rate - $ 0.92
0.02 + $ 0.92 = Standard Rate
$ 0.94 = Standard Rate
b) Standard Material Quantity per unit
Formula :
Material Quantity Variance = Standard Rate X ( Standard Quantity - Actual Quantity)
- 7,755 = $ 0.94 X ( Standard Quantity - 130,800)
-7,755 / $0.94 = Standard Quantity - 130,800
-8,250 = Standard Quantity - 130,800
-8,250 + 130,800 = Standard Quantity
122,550 = Standard Quantity
Standard Quantity per unit = Standard Quantity for actual Production / Actual Units
= 122,550 / 28500
= 4.30 Pound per unit
c) Standard Hours Allowed for units
Standard Hours for Actual production = Actual Production X Standard Hours Required per unit
= 28,500 X 1.60
= 45,600 Hours