Standard Direct Materials Cost per Unit Billingsly Company produces chocolate bars. The primary materials used in producing chocolate bars are cocoa, sugar, and milk. The standard costs for a batch of chocolate (7,100 bars) are as follows: Ingredient Quantity Price Cocoa 600 lbs. $1.25 per lb. Sugar 120 lbs. $0.50 per lb. Milk 180 gal. $2.60 per gal. Determine the standard direct materials cost per bar of chocolate. Round to two decimal places.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Standard Direct Materials Cost per Unit
Billingsly Company produces chocolate bars. The primary materials used in producing chocolate bars are cocoa, sugar, and milk. The
Ingredient Quantity Price
Cocoa 600 lbs. $1.25 per lb.
Sugar 120 lbs. $0.50 per lb.
Milk 180 gal. $2.60 per gal.
Determine the standard direct materials cost per bar of chocolate. Round to two decimal places.
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