[infinity]

ChemKing uses a standard costing system in the manufacture of its single product. The 35,000 units of raw material in inventory were purchased for $105,000, and two units of raw material are required to produce one unit of final product. In November, the company produced 12,000 units of product. The standard allowed for material was $60,000, and there was an unfavorable quantity variance of $2,500.

The materials price variance for the units used in November was:

a. $2,500 favorable.

b. $11,000 unfavorable.

c. $12,500 unfavorable.

d. $2,500 unfavorable.

BEC 74

Never give up, never surrender.

[infinity]

Happy Saturday everyone! According to my calculations, I was getting $12,000 unfavorable while using Cindy's matrix. What did you guys arrive as the materials price variance?

BEC 74

Never give up, never surrender.

[infinity]

Happy Saturday everyone! According to my calculations, I was getting $12,000 unfavorable while using Cindy's matrix. What did you guys arrive as the materials price variance?

BEC 74

Never give up, never surrender.

[infinity]

Correct answer is (C)

BEC 74

Never give up, never surrender.

[infinity]

Correct answer is (C)

BEC 74

Never give up, never surrender.

[Anonymous]

are you looking for an explanation to this answer or can you explain the answer?

[Anonymous]

are you looking for an explanation to this answer or can you explain the answer?

[Whopper Warrior]

1. 105,000 actual cost / 35,000 units = 3$ actual cost per unit

2. $60,000 / 24,000 (12,000 widgets produces * 2 standard unit) = $2.50 budgeted cost

3. Effeciency Variance = (Budg Materials – Act Materials) * Budg Cost

(2,500) = (24,000 – x) * 2.50

(1,000) = (24,000 -x)

x = 24,000 – (1,000) (addition)

x = 25,000 actual materials used

4. Cost Variance = (Budg Cost – Act Cost) * Actual Materials Used

X = (2.50 – 3.00) * 25,000

X = (.5) * 25,000

X = (12,500)

An unfavorable price variance of ($12,500), answer C.

You are skipping step #3 and trying to use standard units; when you need to use ACTUAL units for COST.

An easy way to remember:

Effeciency (hours, useage, et all) is almost always Budgeted Cost

Cost ($ spent, hourly rate) is almost always ACTUAL.

Effeciency I care about what I budgeted (where are we, where should we be) nad for Cost I care about what I ACTUALLY spent.

ALL 4 parts passed summer 13
Ethics October 13
Experience (waiting)

Becker Only

[Whopper Warrior]

1. 105,000 actual cost / 35,000 units = 3$ actual cost per unit

2. $60,000 / 24,000 (12,000 widgets produces * 2 standard unit) = $2.50 budgeted cost

3. Effeciency Variance = (Budg Materials – Act Materials) * Budg Cost

(2,500) = (24,000 – x) * 2.50

(1,000) = (24,000 -x)

x = 24,000 – (1,000) (addition)

x = 25,000 actual materials used

4. Cost Variance = (Budg Cost – Act Cost) * Actual Materials Used

X = (2.50 – 3.00) * 25,000

X = (.5) * 25,000

X = (12,500)

An unfavorable price variance of ($12,500), answer C.

You are skipping step #3 and trying to use standard units; when you need to use ACTUAL units for COST.

An easy way to remember:

Effeciency (hours, useage, et all) is almost always Budgeted Cost

Cost ($ spent, hourly rate) is almost always ACTUAL.

Effeciency I care about what I budgeted (where are we, where should we be) nad for Cost I care about what I ACTUALLY spent.

ALL 4 parts passed summer 13
Ethics October 13
Experience (waiting)

Becker Only

[Author]

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