Suver Corporation has a standard costing system. The following data are available for June: The actual price per pound of direct materials purchased in June was:
A) $6.10 per pound
B) $5.90 per pound
C) $6.25 per pound
D) $6.30 per pound

Question

Suver Corporation has a standard costing system. The following data are available for June:  The actual price per pound of direct materials purchased in June was:
A) $6.10 per pound 
B) $5.90 per pound 
C) $6.25 per pound 
D) $6.30 per pound

Quizplus · Accepted Answer

In a standard costing system, the direct materials price variance is calculated by comparing the actual price paid for materials to the standard price. The formula for calculating the direct materials price variance is:

Direct materials price variance = (Actual price - Standard price) x Actual quantity purchased

Using the numbers given in the question, we can calculate the direct materials price variance as follows:

$6,200 - ($6.00 x 1,000) = $200 favorable

We know that the direct materials price variance is favorable, which means that the actual price paid for materials was less than the standard price. To find the actual price per pound of direct materials purchased in June, we need to divide the total cost of materials purchased by the total pounds purchased:

$6,200 / 1,000 = $6.20 per pound

Since the actual price is less than the standard price of $6.25 per pound, we can eliminate choice D. Since the actual price is greater than the standard price of $6.10 per pound, we can eliminate choice A. This leaves us with choices B and C. However, since the actual price is closer to $6.25 per pound than it is to $5.90 per pound, the best choice is C.

Suver Corporation Has a Standard Costing System