Question

Dozen Bakery makes cupcakes and cookies. Dozen gathered the following information for the current year regarding its use of flour and butter (flour is a direct material for cupcakes and butter is a direct material for cookies): Flour (Direct Butter (Direct Materials) Materials) Cupcakes Cookies Standard quantity per batch 5 bs. 3 lbs. Standard Price (SP) per pound $0.25/b. Actual quantity purchased (AQP) and used per batch (pounds) 5 lbs. Actual Price (AP) paid 0.85/lb. $1.89/b. Price variance $120 U $1700 U Quantity variance $327 F Flexible budget variance $3100 U Number of units produced 370 550 What is the standard direct material price per pound for the butter in the cookies? Selected Answer: $1.27/b. Answers: $1.89/lb. $1.27/b. $3.09/lb. $5.64/lb.

Answer 1

Question

Formula for Price Variance = (Actual unit cost - Standard unit cost) * Actual Quantity Purchased

$ 1700 U = [$ 1.89 / lb - Standard unit cost (SUC)] * 2750 lbs

Standard Unit Cost (SUC) = $ 1.27 / lb

Note :- Actual Quantity Purchased = 5 lbs * 550 Units = 2750 lbs (Actual qty per batch * Actual quantity produced)

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