Question

In: Accounting

Kennedy Inc. has the following data for its operation in August: Increase in direct materials inventory...

Kennedy Inc. has the following data for its operation in August: Increase in direct materials inventory 100Sets Direct materials purchased (AQ) 1,600Sets Finished goods manufactured 700units Direct materials purchase-price variance$656Favorable Budgeted Finished goods to manufacture 800Units Direct materials purchases 2,000Sets Direct materials per unit of finished goods 2Sets Direct materials price per set (SP)$5.20

What was the actual purchase price (AP) per set of direct materials purchased (to two decimal places)?

Multiple Choice

$4.79.

$4.84.

$5.16.

$5.24.

$5.23.

Solutions

Expert Solution

Answer:
Materials Price Variance
           = Actual Quantity (AQ) x ( Standard Price (SP) (-) Actual price (AP) )
Materials Price Variance = AQ x (SP (-) AP)
Actual Price (AP) = Standard Price (-) ( Materials Price Variance / Actual Quantity )
                                     =   $ 5.20 (-) ( $ 656 / 1,600 )
                                     =   $ 5.20 (-) $ 0.41
Actual Price (AP)   =   $ 4.79
Actual purchase price (AP) per set of direct materials   = $ 4.79
Option (a) is Correct

ekkarill92 answered 2 years ago
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