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 standard production cost for the period is calculated by multiplying the budgeted output by the standard cost per unit, which gives:

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

Since the actual production was 450 units and the actual costs were $50,200, we can calculate the actual cost per unit:

Actual cost per unit = Actual costs ÷ Actual production = $50,200 ÷ 450 units = $111.56 per unit

To calculate the total standard production cost for the actual production of 450 units, we multiply the actual production by the standard cost per unit:

450 units x $100 per unit = $45,000

Therefore, the answer is C) $45 000.

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