April Industries employs a standard costing system in the manufacturing of its sole product, a park bench. They purchased 60,000 feet of raw material for $240,000, and it takes 5 feet of raw materials to produce one park bench. In August, the company produced 10,000 park benches. The standard cost for material output was $100,000, and there was an unfavorable direct materials quantity variance of $5,000.
A. What is April Industries’ standard price for one unit of material?
B. What was the direct materials price variance for August?
A. What is April Industries’ standard price for one unit of material?
B. What was the direct materials price variance for August?
Answer
4
(2 stars)
0
(a) $100,000/10000 = $10
(b)
actual price to produce 1 park bench
= ($240,000/60,000) x 5 = $20
so the direct material price variance in august
= (10-20) x 10,000 = - $100,000