Asked by Samantha DiJohn on May 17, 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) $6.88 per pound
B) $7.00 per pound
C) $7.10 per pound
D) $7.12 per pound
Direct Materials
Raw materials that are directly traceable to the manufacturing of a specific product and are an integral part of the finished product.
Actual Price
The price at which a good or service is sold in the market, as opposed to its listed or theoretical price.
Standard Costing
An accounting method that uses standard costs for cost control and financial reporting.
- Calculate and analyze direct material price variances.
Verified Answer
Actual price per pound of direct materials purchased = Total cost of direct materials purchased ÷ Total quantity of direct materials purchased
From the given data, we know that the total cost of direct materials purchased was $162,400 and the total quantity of direct materials purchased was 23,000 pounds.
Therefore,
Actual price per pound of direct materials purchased = $162,400 ÷ 23,000 pounds
= $7.043 per pound
Rounding this to the nearest cent gives us the answer of $7.10 per pound, which is choice C.
Learning Objectives
- Calculate and analyze direct material price variances.
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