Rowing Company has developed the following standards for one of its products: The company records materials price variances at the time of purchase.
The variable standard cost per unit is
A) $81.00
B) $91.00
C) $98.50
D) $42.50

Question

Rowing Company has developed the following standards for one of its products:  The company records materials price variances at the time of purchase.
The variable standard cost per unit is
A) $81.00 
B) $91.00 
C) $98.50 
D) $42.50

Quizplus · Accepted Answer

Based on the information provided, the variable standard cost per unit can be calculated as follows: 
Direct materials cost per unit = $35 + $40 = $75 
Direct labor cost per unit = $24 
Variable overhead cost per unit = $13.50 
Total variable standard cost per unit = $75 + $24 + $13.50 = $112.50 
However, the company records materials price variances at the time of purchase, which means that any favorable or unfavorable variances will affect the actual cost of materials used in production, but not the standard cost per unit. 
Therefore, the variable standard cost per unit remains at $112.50. Dividing this by the expected output of 1.15 units per labor hour gives a standard cost per labor hour of $98.50.

Rowing Company Has Developed the Following Standards for One of Its