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Furniture manufacture has 3 units of standard direct material allowed for one unit of output. One unit of direct material is expected to be purchased on average at $10. During the period the manufacture has produced 7000 units of output 4 units of direct materials have been used. The direct materials have been purchased at $9 per unit. The total quantities of materials purchased were 30,000 units. 1. What is a standard cost for material? 2. What will be the total inputs allowed as per the budget for actual outputs achieved? 3. What is total actual direct material used to produce actual output? 4. What is the material price variance? 5. What is the material efficiency variance? 6. What will be flexible budget variance? 7. Which one of the following items would never appear on a cash budget?

Sagot :

Anthougoidn

1. The standard cost per unit of material is $30 ($10 x 3).

2. The total inputs allowed per budget for actual outputs achieved = 21,000 (3 x 7,000).

3. The total actual direct material used to produce the actual outputs is 28,000 (7,000 x 4).

4. The material price variance = $28,000 Unfavorable ($3 - $4) x 28,000.

5. The material efficiency variance = $21,000 Unfavorable (28,000 - 21,000) x $3.

6. The flexible budget variance = $42,000 Unfavorable (28,000 x $9) - (21,000 x $10).

7. The item that would never appear on a cash budget is the cost of direct material variance.  However, the specific items are not indicated herein.

Data and Calculations:

Standard units of materials allowed = 3 units

Cost of a unit of material =$10

Standard cost direct material per unit of output = $30 ($10 x 3)

Number of units produced = 7,000

Actual direct materials per unit used = 4 units

Total quantities of materials used = 28,000 (7,000 x 4)

Cost of a unit = $9

Actual direct material cost per unit = $36 ($9 x 4)

Total quantities of materials purchased = 30,000

Cost of standard direct materials allowed = $210,000 ($10 x 3 x 7,000)

Cost of actual direct materials used = $252,000 ($9 x 4 x 7,000)

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