Perfect Pet Collar Company makes custom leather pet collars. The company expects each collar to require 1.75 feet of leather and predicts leather will cost $3.00 per foot. Suppose Perfect Pet made 70 collars during February. For these 70 collars, the company actually averaged 2.00 feet of leather per collar and paid $2.50 per foot. Required: 1. Calculate the standard direct materials cost per unit. 2. Without performing any calculations, determine whether the direct materials price variance will be favorable or unfavorable. 3. Without performing any calculations, determine whether the direct materials quantity variance will be favorable or unfavorable.
Perfect Pet Collar Company makes custom leather pet collars. The company expects each collar to require 1.75 feet of leather and predicts leather will cost $3.00 per foot. Suppose Perfect Pet made 70 collars during February. For these 70 collars, the company actually averaged 2.00 feet of leather per collar and paid $2.50 per foot. Required: 1. Calculate the standard direct materials cost per unit. 2. Without performing any calculations, determine whether the direct materials price variance will be favorable or unfavorable. 3. Without performing any calculations, determine whether the direct materials quantity variance will be favorable or unfavorable.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Perfect Pet Collar Company makes custom leather pet collars. The company expects each collar to require 1.75 feet of leather and
predicts leather will cost $3.00 per foot. Suppose Perfect Pet made 70 collars during February. For these 70 collars, the company
actually averaged 2.00 feet of leather per collar and paid $2.50 per foot.
Required:
1. Calculate the standard direct materials cost per unit.
2. Without performing any calculations, determine whether the direct materials price variance will be favorable or unfavorable.
3. Without performing any calculations, determine whether the direct materials quantity variance will be favorable or unfavorable.
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