The Bowden Corporation makes a single product. Only one kind of direct material is used to make this product. The company uses a standard cost system. The company's cost records for June show the following data: There were no beginning inventories of direct materials.
The standard cost of direct material for one unit of output is:
A) $2 per unit
B) $16 per unit
C) $8 per unit
D) $10 per unit

Question

The Bowden Corporation makes a single product. Only one kind of direct material is used to make this product. The company uses a standard cost system. The company's cost records for June show the following data:  There were no beginning inventories of direct materials.
The standard cost of direct material for one unit of output is:
A) $2 per unit 
B) $16 per unit 
C) $8 per unit 
D) $10 per unit

Quizplus · Accepted Answer

Materials quantity variance = (AQ - SQ) × SP
$8,000 U = [21,000 pounds - (10,000 units × Standard quantity of the input per unit of output)] × $8 per pound
$8,000 = [21,000 pounds - (10,000 units × Standard quantity of the input per unit of output)] × $8 per pound
$8,000 = $168,000 - [(10,000 units × Standard quantity of the input per unit of output) × $8 per pound]
(10,000 units × Standard quantity of the input per unit of output) × $8 per pound = $168,000 - $8,000
(10,000 units × Standard quantity of the input per unit of output) × $8 per pound = $160,000
(10,000 units × Standard quantity of the input per unit of output) = $160,000 ÷ $8 per pound
10,000 units × Standard quantity of the input per unit of output = 20,000 pounds
Standard quantity of the input per unit of output = 20,000 pounds ÷ 10,000 units
Standard quantity of the input per unit of output = 2 pounds per unit
Standard cost of direct material for one unit of output = 2 pounds per unit × $8 per pound = $16 per unit

The Bowden Corporation Makes a Single Product