Asked by Elena Franco on Apr 24, 2024
Verified
Suver Corporation has a standard costing system. The following data are available for June: The actual price per pound of direct materials purchased in June was:
A) $6.10 per pound
B) $5.90 per pound
C) $6.25 per pound
D) $6.30 per pound
Actual Price
The real price at which a transaction occurs, as opposed to an estimated or listed price.
Direct Materials
Raw materials that can be directly traced to the production of specific goods or services, reflecting in the cost of goods sold.
- Analyze the function of standard quantities and prices in the oversight of costs for materials and labor.
Verified Answer
MU
Mahesh Udayanga7 days ago
Final Answer :
C
Explanation :
In a standard costing system, the direct materials price variance is calculated by comparing the actual price paid for materials to the standard price. The formula for calculating the direct materials price variance is:
Direct materials price variance = (Actual price - Standard price) x Actual quantity purchased
Using the numbers given in the question, we can calculate the direct materials price variance as follows:
$6,200 - ($6.00 x 1,000) = $200 favorable
We know that the direct materials price variance is favorable, which means that the actual price paid for materials was less than the standard price. To find the actual price per pound of direct materials purchased in June, we need to divide the total cost of materials purchased by the total pounds purchased:
$6,200 / 1,000 = $6.20 per pound
Since the actual price is less than the standard price of $6.25 per pound, we can eliminate choice D. Since the actual price is greater than the standard price of $6.10 per pound, we can eliminate choice A. This leaves us with choices B and C. However, since the actual price is closer to $6.25 per pound than it is to $5.90 per pound, the best choice is C.
Direct materials price variance = (Actual price - Standard price) x Actual quantity purchased
Using the numbers given in the question, we can calculate the direct materials price variance as follows:
$6,200 - ($6.00 x 1,000) = $200 favorable
We know that the direct materials price variance is favorable, which means that the actual price paid for materials was less than the standard price. To find the actual price per pound of direct materials purchased in June, we need to divide the total cost of materials purchased by the total pounds purchased:
$6,200 / 1,000 = $6.20 per pound
Since the actual price is less than the standard price of $6.25 per pound, we can eliminate choice D. Since the actual price is greater than the standard price of $6.10 per pound, we can eliminate choice A. This leaves us with choices B and C. However, since the actual price is closer to $6.25 per pound than it is to $5.90 per pound, the best choice is C.
Learning Objectives
- Analyze the function of standard quantities and prices in the oversight of costs for materials and labor.
Related questions
The Standard Price Per Unit for Direct Materials Should Reflect ...
An Unfavorable Materials Quantity Variance Indicates That ...
A Quantity Standard Indicates How Much of an Input Should ...
The Materials Price Variance Is Computed Based on the Amount ...
The Standard Labor Rate Per Hour Should Not Include Any ...