Oklahoma Manufacturing Company uses a standard cost accounting system. In 2012, the
company produced 28,500 units. Each unit took several pounds of direct materials and 1½
standard hours of direct labor at a standard hourly rate of $13.00. Normal capacity was 49,960
direct labor hours. During the year, 130,900 pounds of raw materials were purchased at $0.95 per
pound. All materials purchased were used during the year.
(a)
If the materials price variance was $1,309 favorable, what was the standard materials price per
pound?
Oklahoma Manufacturing Company uses a standard cost accounting system. In 2012, the
company produced 28,500 units. Each unit took several pounds of direct materials and 1½
standard hours of direct labor at a standard hourly rate of $13.00. Normal capacity was 49,960
direct labor hours. During the year, 130,900 pounds of raw materials were purchased at $0.95
per pound. All materials purchased were used during the year.
Solution
Purchase price variance = (Actual price - Standard Price) x Actual quantity
Standard Price = Purchase price variance/actual quantity - Actual Price
= $1309/130900 + $0.95 =$0.01+0.95 = $0.96
Standard Price is $0.96 per pound.
Oklahoma Manufacturing Company uses a standard cost accounting syste.pdf
1. Oklahoma Manufacturing Company uses a standard cost accounting system. In 2012, the
company produced 28,500 units. Each unit took several pounds of direct materials and 1½
standard hours of direct labor at a standard hourly rate of $13.00. Normal capacity was 49,960
direct labor hours. During the year, 130,900 pounds of raw materials were purchased at $0.95 per
pound. All materials purchased were used during the year.
(a)
If the materials price variance was $1,309 favorable, what was the standard materials price per
pound?
Oklahoma Manufacturing Company uses a standard cost accounting system. In 2012, the
company produced 28,500 units. Each unit took several pounds of direct materials and 1½
standard hours of direct labor at a standard hourly rate of $13.00. Normal capacity was 49,960
direct labor hours. During the year, 130,900 pounds of raw materials were purchased at $0.95
per pound. All materials purchased were used during the year.
Solution
Purchase price variance = (Actual price - Standard Price) x Actual quantity
Standard Price = Purchase price variance/actual quantity - Actual Price
= $1309/130900 + $0.95 =$0.01+0.95 = $0.96
Standard Price is $0.96 per pound
