Question

alt materas. The company uses a standard costing s siem and s cues var arces as soon as h od turnt re roducts from h Oakwood Inc actures en tables, am chars, and 에her man posble The purchasing manager s responstile tor controling direct matersai prke variances, and production managers are responsible tor controling usage variances. During November, the following results were reported for the production of American Oak armchairs: 1,560 armchairs 18,200 board feet 17,360 board feet 5103.2 per unit produced $2,760 unfavorable Units produced Direct materials purchased Direct materials issued into production Standard cost per unit (12 board feet $8.6) Purchase price variance Required: a. Calculate the actual price paid per board foot purchased (Do not round intermediate calculations. Round your answer to 2 decimal places) per board foot b. Calculate the standard quantity of materials alowed (in board teet) for the number of units produced С. Calcutate the direct materas usage variance (indicate the effect of each variance by selecting "F-for favorable, "U" for unfavorable, and Tone" for no errect (Le, Zero variance).)

Answer 1

Ans. A	Purchase price variance = ( Actual price * Actual quantity) - (Standard price * Actual quantity)
	$2,760 = (Actual price * 18,200) - ($8.60 * 18,200)
	$2,760 = (Actual price * 18,200) - $156,520
	$156,520 + $2,760 = Actual price * 18,200
	$159,280 = Actual price * 18,200
	Actual price =   $159,280 / 18,200
	Actual price =   $8.75
Ans. B	Standard quantity of materials allowed = Units produced * standard quantity per unit of output
		1,560 * 12 board feet
		18720	board feet
Ans. C	Materials usage variance = (Standard quantity - actual quantity) * Standard price
		(18,720 - 18,200) * $8.60
		520 * $8.60
		$4,472	favorable