Shade Company adopted a standard cost system several years ago.The standard costs for direct labor and direct materials for its single product are as follows: Materials (5 kilograms x $12.00 per kilogram)= $60.00/unit.Direct labor (3.5 hours x $20.00 per hour)= $70.00/unit.All materials were issued at the beginning of processing.The operating data shown below were taken from the records for December:
The actual direct materials purchase price per kilogram is:
A)$11.80.
B)$11.96.
C)$12.04.
D)$12.20.
E)$12.50.

Question

Shade Company adopted a standard cost system several years ago.The standard costs for direct labor and direct materials for its single product are as follows: Materials (5 kilograms x $12.00 per kilogram)= $60.00/unit.Direct labor (3.5 hours x $20.00 per hour)= $70.00/unit.All materials were issued at the beginning of processing.The operating data shown below were taken from the records for December: 
The actual direct materials purchase price per kilogram is:
A)$11.80. 
B)$11.96. 
C)$12.04. 
D)$12.20. 
E)$12.50.

Quizplus · Accepted Answer

To find the actual direct materials purchase price per kilogram, we need to divide the total actual direct materials cost by the total actual kilograms of materials used. 
Total actual direct materials cost = $74,760 
Total actual kilograms of materials used = 6,240 kg 
Therefore, actual direct materials purchase price per kilogram = $74,760 ÷ 6,240 kg = $11.96/kg. 
So, the correct answer is B, $11.96.

Shade Company Adopted a Standard Cost System Several Years Ago