In Command Ltd completed operations for the week and the accountant was preparing to make journal entries necessary to prepare a set of interim financial statements. Unfortunately, he discovered some of the data concerning direct materials had been lost. He was able to find the following: $$\begin{array} { l l }
\text { Efficiency variance } & \$ 9,000 \text { Unfavourable } \
\text { Stardard price } & \$ 10 \text { per urit } \
\text { Actual units purchased } & 18,000 \
\text { Inventory decrease } & 1,000 \text { units } \
\text { Budget variance } & \$ 1,800 \text { Favourable }
\end{array}$$ The actual direct materials price paid per unit was:
A) $9.60
B) $9.40
C) $10.00
D) $10.60

Question

In Command Ltd completed operations for the week and the accountant was preparing to make journal entries necessary to prepare a set of interim financial statements. Unfortunately, he discovered some of the data concerning direct materials had been lost. He was able to find the following: $$\begin{array} { l l } 
\text { Efficiency variance } & \$ 9,000 \text { Unfavourable } \
\text { Stardard price } & \$ 10 \text { per urit } \
\text { Actual units purchased } & 18,000 \
\text { Inventory decrease } & 1,000 \text { units } \
\text { Budget variance } & \$ 1,800 \text { Favourable }
\end{array}$$ The actual direct materials price paid per unit was:
A) $9.60
B) $9.40
C) $10.00
D) $10.60

Quizplus · Accepted Answer

The budget variance is favorable, meaning the actual cost was less than the standard cost. The efficiency variance is unfavorable, indicating more materials were used than expected. The actual price per unit can be calculated using the budget variance formula: (Standard Price - Actual Price) x Actual Quantity = Budget Variance. Solving for the actual price gives $9.40.

In Command Ltd Completed Operations for the Week and the Accountant