Emerald Marine Stores Company manufactures decorative fittings for luxury yachts that require highly skilled labor, and special metallic materials. Emerald uses standard costs to prepare its flexible budget. For the first quarter of 2015, direct material and direct labor standards for one of their popular products were as follows: Direct materials: 3 pounds per unit; $4 per pound
Direct labor: 4 hours per unit; $15 per hour
During the first quarter, Emerald produced 5,000 units of this product. Actual direct materials and direct labor costs were $65,000 and $325,000, respectively.
For the purposes of preparing the flexible budget, calculate the total standard direct materials cost at a production volume of 5,000 units.

Question

Quizplus · Accepted Answer

To calculate the total standard direct materials cost, we need to multiply the standard quantity (3 pounds per unit) by the standard price per pound ($4) and then by the actual production volume (5,000 units). Therefore, 3 pounds x $4 x 5,000 units = $60,000, which is choice A.

Emerald Marine Stores Company Manufactures Decorative Fittings for Luxury Yachts