Cryolite uses a standard costing system to gauge results for their single product. 70,000 kilograms of direct materials were purchased for $385,000. Two kilograms of direct materials are needed to produce one unit of product. In March, the company produced 12,000 units. The standard cost allowed for direct material was $120,000, and there was an unfavourable direct materials efficiency variance of $2,500. (CMA)The kilograms of direct materials used in March to produce output totalled:
A)12,500
B)23,500
C)24,500
D)25,500

Question

Quizplus · Accepted Answer

The standard cost allowed for direct materials is $120,000, which means the standard cost per kilogram is $120,000 / (2 kg/unit * 12,000 units) = $5 per kg. The unfavourable efficiency variance of $2,500 indicates that more materials were used than the standard allowed. The standard allowed usage is 24,000 kg (2 kg/unit * 12,000 units). Therefore, the actual usage is 24,000 kg + 2,500 kg = 24,500 kg.

Cryolite Uses a Standard Costing System to Gauge Results for Their