During the period Richeleau produced 1,000 units of product. The flexible budget for standard costs is: Direct materials $43,000
Direct labour 67,000
Variable overhead 30,000
Fixed overhead 25,000
Variances for the period are:
Direct materials price $ 400 U
Direct materials efficiency 500 F
Direct labour price 600 F
Direct labour efficiency 200 U
Variable overhead spending 300 F
Variable overhead efficiency 100 F
Fixed overhead spending 500 F
Fixed overhead production volume 1,000 U
The direct materials inventory increased during the period by 1,000 (at standard cost). What was the actual cost of direct materials purchased during the period?
A)$41,900
B)$42,900
C)$43,100
D)$43,900

Question

Quizplus · Accepted Answer

The standard cost for direct materials is $43,000. The price variance is $400 unfavorable, meaning the actual cost was $400 more than the standard cost. Therefore, the actual cost of direct materials purchased is $43,000 + $400 = $43,400. However, since the inventory increased by $1,000 at standard cost, the actual cost of materials purchased is $43,400 - $1,000 = $42,400. Since this does not match any option, the closest option considering the variance is $43,900.

During the Period Richeleau Produced 1,000 Units of Product