Question

Georgia, Inc. has collected the following data on one of its products. The actual cost of the direct materials used is:

Direct materials standard (2 lbs @ $3/lb)	$6	per finished unit
Total direct materials cost variance—unfavorable	$25,250
Actual direct materials used	75,000	lbs.
Actual finished units produced	25,000	units

Multiple Choice

• $200,750.

• $75,000.

• $175,250.

• $124,750.

• $150,000.

Answer 1

Answer

• Standard cost = 25000 units x $ 6 = $ 150,000
• Material cost Variance = $ 25250 Unfavourable
  This means that Actual cost is $ 25250 is MORE than Standard cost.
• Actual cost = $ 150000 + 25250
  = $ 175,250
• Correct Answer = Option #3: $ 175,250