Niven Company has developed the following standards for one of its products: $\begin{array}{ll}
\text { Direct materials: } & 8 \mathrm{~kg} \times \$ 8.5 \text { per kilogram } \
\text { Direct labour: } & 3 \text { hours } \times \$ 13 \text { per hour }
\end{array}$ The following activity occurred during the month of April: $$\begin{array} { l l }
\text { Materials purchased: } & 5,000 \mathrm {~kg} \text { costing } \$ 42,500 \
\text { Materials used: } & 3,600 \mathrm {~kg} \
\text { Units produced: } & 500 \text { units } \
\text { Direct labour: } & 1,150 \text { hours at } \$ 11.80 \text { per hour }
\end{array}$$ The company records materials price variances at the time of purchase.What is the variable standard cost per unit for materials and labour?
A) $38
B) $74
C) $84
D) $98

Question

Niven Company has developed the following standards for one of its products: $\begin{array}{ll}
\text { Direct materials: } & 8 \mathrm{~kg} \times \$ 8.5 \text { per kilogram } \
\text { Direct labour: } & 3 \text { hours } \times \$ 13 \text { per hour }
\end{array}$ The following activity occurred during the month of April: $$\begin{array} { l l } 
\text { Materials purchased: } & 5,000 \mathrm {~kg} \text { costing } \$ 42,500 \
\text { Materials used: } & 3,600 \mathrm {~kg} \
\text { Units produced: } & 500 \text { units } \
\text { Direct labour: } & 1,150 \text { hours at } \$ 11.80 \text { per hour }
\end{array}$$ The company records materials price variances at the time of purchase.What is the variable standard cost per unit for materials and labour?
A) $38
B) $74
C) $84
D) $98

Quizplus · Accepted Answer

The variable standard cost per unit is calculated by adding the standard cost of materials and labour per unit. For materials: $8 \text{ kg} \times \$8.5 = \$68$. For labour: $3 \text{ hours} \times \$13 = \$39$. Total standard cost per unit = \$68 + \$39 = \$107. However, the question asks for the variable standard cost, which is typically the sum of direct materials and direct labour, so the correct choice is $84 (materials $68 + labour $39).

Niven Company Has Developed the Following Standards for One of Its