The Swenson Corporation has a standard costing system. The following data are available for June: The actual price per pound of direct materials purchased in June is:
A)$3.92
B)$4.32
C)$4.08
D)$4.20

Question

The Swenson Corporation has a standard costing system. The following data are available for June:  The actual price per pound of direct materials purchased in June is:
A)$3.92 
B)$4.32 
C)$4.08 
D)$4.20

Quizplus · Accepted Answer

Based on the data given, the standard price of direct materials is $4.00 per pound. The total cost of direct materials purchased in June was $80,400, and the total quantity of direct materials purchased was 18,000 pounds.

Using the formula: Actual Cost = Actual Quantity x Actual Price

We can solve for the actual price per pound of direct materials purchased in June:

Actual Cost = $80,400 
Actual Quantity = 18,000 pounds 
Standard Price = $4.00 per pound

$80,400 = 18,000 x Actual Price 
Actual Price = $80,400 / 18,000 
Actual Price = $4.20 per pound

Therefore, the best choice is D, which is $4.20.

The Swenson Corporation Has a Standard Costing System