David Cole Industries budgeted 4,000 pounds of direct materials to make 8,000 units of product. The company actually used 4,200 pounds to make the 8,000 units. The direct materials efficiency variance is $1,400 unfavorable. What is the standard cost per pound?

Question

Quizplus · Accepted Answer

The direct materials efficiency variance is calculated as (Actual Quantity - Standard Quantity) x Standard Cost per Pound. Here, (4,200 - 4,000) x Standard Cost per Pound = $1,400. Solving for the Standard Cost per Pound gives $7.00.

David Cole Industries Budgeted 4,000 Pounds of Direct Materials to Make