I am in a bit of a jam i am having problems figuring this out.
I need to calculate the standard quantity for materials for the month and materials allowed per unit of product?
During the month 6,000 pounds of direct material was purchased at a cost of 16,500.
All of this material was used in the production of 1,400 units of product. Direct labor totaled 28,500.00
The material quantity variance= $1200U
total materials variance =$300F
Labor efficiency variance= $4500.00F

I have calculated the standard quantity or hours per unit to be 3.00 per pound.
I am having a very difficult time figuring out the formula for the standard price and the standard cost per unit.
Please help I have been trying for hours!! :confused:

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Originally Posted by finmang1

[B]
I have calculated the standard quantity or hours per unit to be 3.00 per pound.

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Where exactly did you come up with this?

There's more than one way to do this. I learned it with a chart sort of thing, which I have an example of. (Some day I'll do a nicer example.) The numbers you are given in the problem are like down the left side of the "triangle." That is, what would be 46,000, $87,400, $1900U and $2600F in my example. I rarely see problems that do this - they like to see if you know how to do backwards math instead of accounting.

Plug in the numbers given and work backwards to the unknown. For instance, you can get standard price by dividing the total actual cost by the actual units. You know the quantity variance and the actual cost on the left. Use the variance to get to the middle cost, etc. That takes a little thinking, so once you have a figure, do it forward to see if it comes out correctly.

Give this a try and see what you can do.

BTW, you don't have enough info there to do anything with the labor part. Well, you can get that middle number using the variance, but nothing else.

Glad you got it worked out. :-) Good job.