Soylent Corporation's standards for producing a particular product included 10 pounds of materials at $4 per...
Soylent Corporation's standards for producing a particular product included 10 pounds of materials at $4 per pound for each unit of output. Planned production for the period was 2,000 units of output. Actually, 1,800 units were produced, each using 11 pounds of materials purchased at $5 per pound. 20,000 pounds of materials were purchased during the period
The standard cost allowed for actual output achieved is closest to?
| a. |
$80,000 |
|
| b. |
$72,000 |
|
| c. |
$90,000 |
|
| d. |
$64,000 |
The materials price variance is closest to?
| a. |
$20,000 U |
|
| b. |
$18,000 U |
|
| c. |
$27,000 U |
|
| d. |
$31,000 U |
The materials efficiency variance is closest to?
| a. |
$8,000 U |
|
| b. |
$27,000 U |
|
| c. |
$7,200 F |
|
| d. |
$7,200 U |
Homework Answers
The standard cost allowed for actual output achieved is closest to: (b) $ 72000
Working Notes:
Standard Materials required for actual production = actual units produced x Standard materials per unit = 1800 x 10 = 18000 pounds
Standard cost allowed for actual output = 18000 units x standard cost per pound of material = 18000 x $ 4 = $72000
The materials price variance is closest to: (a) $ 20000
Working Notes:
When the basis is Actual quantity of material used
Material Price Variance
= (Actual price per pound - standard price per pound) x actual quantity of materials used
= ($ 5 - $ 4) x 19800
= $19800 (U)
When Quantity of material purchased is used as the basis
Material Price Variance
= (Actual price per pound - standard price per pound) x actual quantity of materials purchased
= ($ 5 - $ 4) x 20000
= $20000 (U)
Material Efficiency Variance is closest to: (d) $7200 (U)
Working Notes:
Material Efficiency Variance
= (Actual usage of material - Standard usage of material) x Standard Rate per unit
= (19800 - 18000) x $ 4
= $ 7200 (U)
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