Information on Kennedy Company's direct material costs follows: $\begin{array} { l r }
\text { Standard price per kilogram of raw materials } & \$ 3.60 \
\text { Actual quantity of raw materials purchased } & 1,600 \text { kilograms } \
\text { Standard quantity allowed for actual production } & 1,450 \text { kilograms } \
\text { Materials purchase price variance-favourable } & \$ 240
\end{array}$ What was the actual purchase price per unit,rounded to the nearest cent?
A) $3.06.
B) $3.11.
C) $3.45.
D) $3.75.

Question

Information on Kennedy Company's direct material costs follows: $\begin{array} { l r } 
\text { Standard price per kilogram of raw materials } & \$ 3.60 \
\text { Actual quantity of raw materials purchased } & 1,600 \text { kilograms } \
\text { Standard quantity allowed for actual production } & 1,450 \text { kilograms } \
\text { Materials purchase price variance-favourable } & \$ 240
\end{array}$ What was the actual purchase price per unit,rounded to the nearest cent?
A) $3.06.
B) $3.11.
C) $3.45.
D) $3.75.

Quizplus · Accepted Answer

The materials purchase price variance is calculated as (Actual Price - Standard Price) x Actual Quantity. Given that the variance is favorable, the actual price must be lower than the standard price. Solving for the actual price: $(AP - 3.60) \times 1600 = -240$, gives $AP = 3.45$.

Information on Kennedy Company's Direct Material Costs Follows What Was the Actual Purchase Price Per Unit,rounded to the l