Kelly Company gathered the following information for 2009:
$$\begin{array} { | l | c | c | }
\hline & \text { Direct materials } & \
\hline & \text { Product X } & \text { Product } \mathbf { Y } \
\hline \text { Standard quantity per unit } & 3 \text { pounds } & 4 \text { pounds } \
\hline \text { Standard price per unit } & \$ 2.00 \text { per pound } & ? \
\hline \text { Actual quantity used per unit } & ? & 3 \text { pounds } \
\hline \text { Actual price paid for material } & \$ 2.50 \text { per pound } & \$ 5.00 \text { per pound } \
\hline \text { Price variance } & \$ 200 \text { unfavorable } & \$ 450 \text { favorable } \
\hline \text { Efficiency variance } & \$ 400 \text { favorable } & ? \
\hline \text { Flexible budget variance } & ? & \$ 2,100 \text { favorable } \
\hline \text { Actual quantity of production } & 200 \text { units } & 300 \text { units } \
\hline
\end{array}$$ What is the actual quantity used per unit for Product X?
A) 2.5 lbs.
B) 3.0 lbs.
C) 1.0 lb.
D) 2.0 lbs.

Question

Kelly Company gathered the following information for 2009:
$$\begin{array} { | l | c | c | } 
\hline & \text { Direct materials } & \
\hline & \text { Product X } & \text { Product } \mathbf { Y } \
\hline \text { Standard quantity per unit } & 3 \text { pounds } & 4 \text { pounds } \
\hline \text { Standard price per unit } & \$ 2.00 \text { per pound } & ? \
\hline \text { Actual quantity used per unit } & ? & 3 \text { pounds } \
\hline \text { Actual price paid for material } & \$ 2.50 \text { per pound } & \$ 5.00 \text { per pound } \
\hline \text { Price variance } & \$ 200 \text { unfavorable } & \$ 450 \text { favorable } \
\hline \text { Efficiency variance } & \$ 400 \text { favorable } & ? \
\hline \text { Flexible budget variance } & ? & \$ 2,100 \text { favorable } \
\hline \text { Actual quantity of production } & 200 \text { units } & 300 \text { units } \
\hline
\end{array}$$ What is the actual quantity used per unit for Product X?
A) 2.5 lbs.
B) 3.0 lbs.
C) 1.0 lb.
D) 2.0 lbs.

Quizplus · Accepted Answer

The efficiency variance for Product X is given as $400 favorable, which means the actual cost was less than the standard cost by $400. The standard quantity per unit is 3 pounds, and the standard price per unit is $2.00 per pound. The actual price paid for material is $2.50 per pound. To find the actual quantity used per unit, we can use the efficiency variance formula: Efficiency Variance = (Standard Quantity - Actual Quantity) * Standard Price. Rearranging to find the Actual Quantity gives us Actual Quantity = Standard Quantity - (Efficiency Variance / Standard Price). Substituting the given values: Actual Quantity = 3 - ($400 favorable / $2.00 per pound) = 3 - 200 pounds (for 200 units) = 3 - 1 pound per unit = 2 pounds per unit. Since the calculation is based on the total production of 200 units, the actual quantity used per unit is 2 pounds, which corresponds to choice D.

Kelly Company Gathered the Following Information for 2009 What Is the Actual Quantity Used Per Unit for Product