Asked by Shannon Forbes on Jul 16, 2024
Verified
The standard cost of direct material for one unit of output is:
A) $2 per unit
B) $16 per unit
C) $8 per unit
D) $10 per unit
Standard Cost
A predetermined cost of manufacturing a single unit or a specified quantity of a particular product or service, used as a benchmark to measure performance.
Direct Material
Raw materials that are directly attributable to the product being manufactured and can be easily traced in the manufacturing process.
Output
In economic and production contexts, this refers to the total amount of goods or services produced by a company or economy.
- Understand how standard costs are used in variance analysis.
Verified Answer
$8,000 U = [21,000 pounds - (10,000 units × Standard quantity of the input per unit of output)] × $8 per pound
$8,000 = [21,000 pounds - (10,000 units × Standard quantity of the input per unit of output)] × $8 per pound
$8,000 = $168,000 - [(10,000 units × Standard quantity of the input per unit of output)× $8 per pound]
(10,000 units × Standard quantity of the input per unit of output)× $8 per pound = $168,000 - $8,000
(10,000 units × Standard quantity of the input per unit of output)× $8 per pound = $160,000
(10,000 units × Standard quantity of the input per unit of output)= $160,000 ÷ $8 per pound
10,000 units × Standard quantity of the input per unit of output = 20,000 pounds
Standard quantity of the input per unit of output = 20,000 pounds ÷ 10,000 units
Standard quantity of the input per unit of output = 2 pounds per unit
Standard cost of direct material for one unit of output = 2 pounds per unit × $8 per pound = $16 per unit
Learning Objectives
- Understand how standard costs are used in variance analysis.
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