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Standard direct materials cost per unit from variance data The following data relating to direct materials cost for October of the current year are taken from the records of Good Clean Fun Inc., a manufacturer of organic toys: Determine the standard direct materials cost per unit of finished product, assuming that there was no inventory of work in process at either the beginning or the end of the month.

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Managerial Accounting

15th Edition
Carl Warren + 1 other
Publisher: South-Western College Pub
ISBN: 9781337912020

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BuyFindarrow_forward

Managerial Accounting

15th Edition
Carl Warren + 1 other
Publisher: South-Western College Pub
ISBN: 9781337912020
Chapter 9, Problem 6E
Textbook Problem
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Standard direct materials cost per unit from variance data

The following data relating to direct materials cost for October of the current year are taken from the records of Good Clean Fun Inc., a manufacturer of organic toys:

Chapter 9, Problem 6E, Standard direct materials cost per unit from variance data The following data relating to direct

Determine the standard direct materials cost per unit of finished product, assuming that there was no inventory of work in process at either the beginning or the end of the month.

To determine

Ascertain the standard direct materials cost per unit of finished products.

Explanation of Solution

Standard cost:

In the accounting records, the term standard cost refers to the practice of replacement of an expected cost for an actual cost. Then the difference between the expected costs and actual costs showing the variance are also recorded periodically. A standard costs is also known as target cost or predetermined cost.

Direct material variances:

The difference between the actual material cost per unit and the standard material cost per unit for the direct material purchased is known as direct material cost variance. The direct material variance can be classified as follows:

  • v Direct materials price variance.
  • v Direct materials quantity variance.

The standard direct materials cost per unit of finished products is$10 (2). 

Working notes:

(1)Determined the direct materials price variance as follows:

  Direct materials price variance = [(Actual priceStandard price)× Actual quantity]$1,500(Unfavorable) =[($5.50Standard price)×3,000 lb

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Chapter 9 Solutions

Managerial Accounting
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