Pardee, Inc. 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: $$\begin{array} { l l }
\text { Efficiency variance } & \$ 4,500 \text { Unfavourable } \
\text { Standard price } & \$ 10 \text { per unit } \
\text { Actual units purchased } & 9,000 \
\text { Inventory decrease } & 1,000 \text { units } \
\text { Budget variance } & \$ 900 \text { Favourable }
\end{array}$$ The standard cost of the direct materials used was:
A) $90,000
B) $95,500
C) $100,000
D) $94,000

Question

Pardee, Inc. 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: $$\begin{array} { l l } 
\text { Efficiency variance } & \$ 4,500 \text { Unfavourable } \
\text { Standard price } & \$ 10 \text { per unit } \
\text { Actual units purchased } & 9,000 \
\text { Inventory decrease } & 1,000 \text { units } \
\text { Budget variance } & \$ 900 \text { Favourable }
\end{array}$$ The standard cost of the direct materials used was:
A) $90,000
B) $95,500
C) $100,000
D) $94,000

Quizplus · Accepted Answer

The standard cost of direct materials used is calculated as the standard price per unit multiplied by the actual units used. The actual units used can be determined by adjusting the purchased units for the inventory decrease: 9,000 - 1,000 = 8,000 units. Therefore, the standard cost is 8,000 units * $10/unit = $80,000. However, considering the efficiency variance of $4,500 unfavorable, the standard cost should be adjusted to $100,000.

Pardee, Inc The Standard Cost of the Direct Materials Used Was: A)

Pardee, Inc The Standard Cost of the Direct Materials Used Was:
A)