Crede Manufacturing uses standard cost accounting. In 2005, 33000 units were produced. Each unit took several pounds of direct materials and 1 1/3 standard hours of direct labor at a standart hourly rate of $12.00. Normal capacity was 42,000 direct labor hours. During the year 132,000 pounds of raw materials were purchased at $0.90 per pound. All pounds purchased were used during the year.
a. If materials price variancewas $3960 unfavorable, what was the standard materials price per pound?
b. If the materials quantity variance was $2,871 favorable, what was the standard materials quantity per unit?
Please see the attached file.
a) Material Price Variance = Actual Quantity*(Actual Price – standard Price)
3960 = 132000*($0.90-standard Price)
Solving we get standard price = 0.90-3960/132000 = $0.87
b) Material Quantity Variance = Standard Price*(Actual quantity – standard quantity)
We have -2871 = 0.87*(132000 – 33000*standard material quantity per unit)
Solving we get
standard material quantity per unit = (132000+2871/0.87)/33000 = 4.1 pounds
c) Standard Hours Allowed …
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