Beckowski Company had the following information available for its specialty product:
Standards for one unit of product:
Direct Materials: 5 pounds at $2 per pound
Direct Labor: 0.50 hour at $16 per hour
Materials and Labor Used to produce 8,500 units:
Direct Materials: 46,000 pounds at ? per pound
Direct Labor: 4,000 hours at $16.80 per hour
If the Direct Materials Price Variance is $4,600 Unfavorable,what is the actual cost per pound of direct materials used?
A) $1.80
B) $1.90
C) $2.00
D) $2.10

Question

Quizplus · Accepted Answer

The Direct Materials Price Variance (DMPV) is calculated as (Actual Price - Standard Price) * Actual Quantity. Given that the DMPV is $4,600 Unfavorable, this means the actual cost is higher than the standard. The standard cost per pound is $2. To find the actual cost per pound, we rearrange the formula: DMPV = (Actual Price - $2) * 46,000. Plugging in the DMPV as $4,600, we solve for the Actual Price: $4,600 = (Actual Price - $2) * 46,000. Dividing $4,600 by 46,000 gives $0.10, which, when added to the standard price of $2, results in an actual price of $2.10 per pound.

Beckowski Company Had the Following Information Available for Its Specialty