An LCD screen is purchased to be used in the manufacturing of a digital watch. The Standard Price (SP) for the LCD screen used is
$30.00.
During the month ofFebruary,
2,600
screens were purchased and used. The materials price variance was
$6,500
unfavorable. The standard number of screens allowed for the actual number of watches manufactured during the period was
23,000
screens. The actual purchase price of each LCD screen may be closest to
A.
$32.50
per LCD screen.
B.
$27.50
per LCD screen.
C.
$3.54
per LCD screen.
D.
$30.40
per LCD screen.
Correct answer----(A) $ 32.50 per LCD screen
Material Price Variance |
||||||
( |
Standard Rate |
- |
Actual Rate |
) |
x |
Actual Quantity |
( |
$ 30.00 |
- |
$ 32.50 |
) |
x |
2600 |
-6500 |
||||||
Variance |
$ 6,500.00 |
Unfavourable-U |
Variance = (SP-AP) x Actual quantity
6500=(30-AP) x 2600
6500= (78000 –AP2600)
AP2600=78000+6500
AP= 84500/2600
AP= $32.50
An LCD screen is purchased to be used in the manufacturing of a digital watch. The...
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