Sitka Industries uses a cost system that carries direct materials inventory at a standard cost. The controller has established these standards for one ladder (unit): Sitka Industries cost standards Standard QuantityStandard PriceDirect materials3 pounds$4.37 per poundDirect labor1.08 hours$13.21 per hourSitka Industries made 2,751 ladders in July and used 8,331 pounds of material to make these units. Smith Industries bought 16,812 pounds of material in the current period. There was a $286 unfavorable direct materials price variance. How much in total did Sitka pay for the materials purchased? Round to the nearest penny, two decimal places.

Solution... Direct material price variance = (Standard rate - actual rate) * actual quantity…

Answered: Sitka Industries uses a cost system…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Sitka Industries uses a cost system that carries direct materials inventory at a standard cost. The controller has established these standards for one ladder (unit):

Sitka Industries cost standards

	Standard Quantity	Standard Price
Direct materials	3 pounds	$4.37 per pound
Direct labor	1.08 hours	$13.21 per hour

Sitka Industries made 2,751 ladders in July and used 8,331 pounds of material to make these units. Smith Industries bought 16,812 pounds of material in the current period. There was a $286 unfavorable direct materials price variance.

How much in total did Sitka pay for the materials purchased? Round to the nearest penny, two decimal places.

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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