Answer :
Answer:
= $0.8 per unit
Explanation:
The question is to determine the Actual price paid for a gallon of direct material
This is answered in the following steps
Step 1) What is the standard Quantity allowed?
= Finished units of products x the manufacturing standard
= 13,000 units x 5 gallons = 65,000
What is the actual quantity consumed = 61,000 gallons
Meaning the Material Quantity variance =
Standard Quantity allowed - Actual Quantity used = 65,000 - 61,000
= 4000
Step 2) Determine the Standard Price
= The disclosed material QUantity Variance/ The determined material Quantity Variance
= 2800F/ 4,000
= 0.7 per unit
Step 3) Determine Material Price Variance
= Actual Quantity (Standard Price - Actual Price
= $6,100u = 61,000 (0.7 - Actual Quantity)
= $0.8 per unit
Answer:
Explanation:
To solve for the actual std cost we need to work out the price variance:
[tex](standard\:cost-actual\:cost) \times actual \: quantity= DM \: price \: variance[/tex]
But, first we need to solve for standard cost using the quantity variance:
actual quantity of gallon
61,000 gallon used
standard gallon:
13,000 units x 5 gallon each = 65,000
[tex](standard\:quantity-actual\:quantity) \times standard \: cost = DM \: quantity \: variance[/tex]
(65,000 - 61,000) x std cost = 2,800
std cost = 2,800 / 4,000 = $ 0.70
Now, we return to price variance formula and solve for actual cost:
[tex](standard\:cost-actual\:cost) \times actual \: quantity= DM \: price \: variance[/tex]
(0.70 - actual cost) x 61,000 = -6,100
0.70 + 6,100 / 61,000 = actual cost
0.80 = actual cost