A department's budgeted output for a 4-week period was 500 units at a standard cost of $100 per unit.The actual production was 450 units and the firm's ledger revealed actual costs for the month to be $50 200.The standard production cost for the period is:
A) $50 000
B) $50 200
C) $45 000
D) Insufficient information to determine

Question

Quizplus · Accepted Answer

The budgeted output for 4 weeks was 500 units at a standard cost of $100 per unit, so the budgeted cost for the period is:

500 units * $100 per unit = $50,000

Since the actual production for the period is 450 units, we need to pro-rate the budgeted cost to determine the standard cost for 450 units:

$50,000 / 500 units = $100 per unit
$100 per unit * 450 units = $45,000

Therefore, the standard production cost for the period is $45,000 (choice C).

A Department's Budgeted Output for a 4-Week Period Was 500