Question

Perfect Pet Collar Company makes custom leather pet collars. The company expects each collar to require 2.10 feet of leather and predicts leather will cost $3.70 per foot. Suppose Perfect Pet made 60 collars during February. For these 60 collars, the company actually averaged 2.30 feet of leather per collar and paid $3.20 per foot. Required: 1. Calculate the standard direct materials cost per unit. (Round your answer to 2 decimal places.) Standard Direct Materials per Collar 2. Without performing any calculations, determine whether the direct materials price variance will be favorable or unfavorable. Direct Material Price Variance

Answer 1

Solution 1:

Standard direct materials cost per unit = 2.10 feet * $3.70 per foot = $7.77 per collar

Solution 2:

Direct materials price variance will be "Favorable" because actual price per foot is lower than standard.