Question

nformation concerning Johnston Co.'s direct materials costs is as follows: Standard price per pound $ 6.45 Actual quantity purchased 2,850 pounds Actual quantity used in production 2,750 pounds Units of product manufactured 700 Materials purchase-price variance–favorable $ 855 Budget data for the period: Units to manufacture 1,000 Units of direct materials 4,000 pounds The direct materials usage variance for the period, rounded to two decimal places, is:a. $713. b. $713. c. $6.50 d. $6.12 e. $6.75 f. $615 g. $6.15

Answer 1

f. $615

Step-by-step explanation:

The standard cost for 2,850 pounds is $18,328.5 (=$6.45 * 2,850)

Materials purchase-price variance–favourable $855; it means standard price is higher and actual material price. Then we have actual cost for purchased 2,850 pounds is $17,527.5 (=$18,328.5-$855)

Then the actual price per pound $6.15 (=$17,527.5/2,850)

The difference between purchased and actual quantity used is 100 pounds (= 2,850 pounds - 2,750 pounds)

The direct materials usage variance for the period is $650 (= $6.15 * 100 pounds)