Purchase Solution

# Crede Manufacturing: Price and quantity variances

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Crede Manufacturing uses standard cost accounting. In 2005, 33000 units were produced. Each unit took several pounds of direct materials and 1 1/3 standard hours of direct labor at a standart hourly rate of \$12.00. Normal capacity was 42,000 direct labor hours. During the year 132,000 pounds of raw materials were purchased at \$0.90 per pound. All pounds purchased were used during the year.
a. If materials price variance was \$3960 unfavorable, what was the standard materials price per pound?
b. If the materials quantity variance was \$2,871 favorable, what was the standard materials quantity per unit?

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a) Material Price Variance = Actual Quantity*(Actual Price - standard Price)
We have
3960 = 132000*(\$0.90-standard Price)
Solving we get standard price = 0.90-3960/132000 = \$0.87

b) Material Quantity Variance = Standard Price*(Actual quantity - standard quantity)
We have -2871 = 0.87*(132000 - 33000*standard material quantity per unit)
Solving we get
standard material quantity per unit = (132000+2871/0.87)/33000 = 4.1 pounds

c) Standard Hours Allowed ...

##### Measures of Central Tendency

This quiz evaluates the students understanding of the measures of central tendency seen in statistics. This quiz is specifically designed to incorporate the measures of central tendency as they relate to psychological research.