Rowing Company has developed the following standards for one of its products: Direct materials: 7 pounds × $8 per pound
Direct labor: 2 hours × $12.50 per hour
Variable manufacturing overhead: 2.5 hours × $7 per hour
The following activity occurred during the month of March:
Materials purchased: 5,000 pounds costing $42,500
Materials used: 3,600 pounds
Units produced: 500 units
Direct labor: 1,150 hours at $11.80/hour
Actual variable manufacturing overhead: $7,500
The company records materials price variances at the time of purchase.
The variable standard cost per unit is
A) $81.00
B) $91.00
C) $98.50
D) $42.50

Question

Quizplus · Accepted Answer

Direct materials:
7 pounds × $8 per pound = $56 per unit

Direct labor:
2 hours × $12.50 per hour = $25 per unit

Variable manufacturing overhead:
2.5 hours × $7 per hour = $17.50 per unit

Total variable standard cost per unit:
$56 + $25 + $17.50 = $98.50

Materials price variances are recorded at the time of purchase, so the actual cost of materials used for the 3,600 pounds is not relevant for calculating the variable standard cost per unit.

Actual variable manufacturing overhead is $7,500, which is not needed to calculate the variable standard cost per unit.

Rowing Company Has Developed the Following Standards for One of Its