The standard cost card for one unit of a finished product shows the following: If the total standard variable cost for one unit of finished product is $78, then the standard price per foot for direct materials is:
A) $2
B) $3
C) $4
D) $5

Question

The standard cost card for one unit of a finished product shows the following:  If the total standard variable cost for one unit of finished product is $78, then the standard price per foot for direct materials is:
A) $2 
B) $3 
C) $4 
D) $5

Quizplus · Accepted Answer

Looking at the standard cost card, we can see that the total standard cost per unit is made up of direct materials, direct labor, and manufacturing overhead. We are given the total standard variable cost, which includes only direct materials and direct labor.

Total Standard Variable Cost = Standard Quantity x Standard Price per unit

We know the total standard variable cost is $78. We also know the standard quantity of direct materials is 20 feet per unit. Solving for the standard price per foot of direct materials:

$78 = 20 x Standard Price per foot

Standard Price per foot = $3.90

Rounding up to the nearest cent, we get a standard price per foot of $4. Therefore, the correct answer choice is C) $4.

The Standard Cost Card for One Unit of a Finished