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): Standard Quantity x Standard Price = Standard Cost Direct materials 3 pounds $4.50 per pound $13.50 Direct labor 2.00 hours 12.00 per hour 24.00 Total cost $37.50 Sitka Industries made 2,900 ladders in July and used 8,600 pounds of material to make these units. Sitka Industries bought 15,400 pounds of material in the current period. There was a $250 unfavorable direct materials price variance. Enter all amounts as positive numbers. A. How much in total did Sitka pay for the 15,400 pounds? Amount paid $fill in the blank 1 B. What is the direct materials quantity variance? Direct materials quantity variance $fill in the blank 2 Favorable C. What is the total direct materials cost variance? Total direct materials cost variance $fill in the blank 4 Favorable D. What if 9,300 pounds were used to make these ladders, what would be the direct materials quantity variance? Direct materials quantity variance $fill in the blank 6 Unfavorable E. If there was a $340 favorable direct materials price variance, how much did Sitka pay for the 15,400 pounds of material? Amount paid $fill in the blank 8

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):

	Standard Quantity	x	Standard Price	=	Standard Cost
Direct materials	3 pounds		$4.50 per pound		$13.50
Direct labor	2.00 hours		12.00 per hour		24.00
Total cost					$37.50

Sitka Industries made 2,900 ladders in July and used 8,600 pounds of material to make these units. Sitka Industries bought 15,400 pounds of material in the current period. There was a $250 unfavorable direct materials price variance.

Enter all amounts as positive numbers.

A. How much in total did Sitka pay for the 15,400 pounds?

Amount paid $fill in the blank 1

B. What is the direct materials quantity variance?

Direct materials quantity variance $fill in the blank 2 Favorable

C. What is the total direct materials cost variance?

Total direct materials cost variance $fill in the blank 4 Favorable

D. What if 9,300 pounds were used to make these ladders, what would be the direct materials quantity variance?

Direct materials quantity variance $fill in the blank 6 Unfavorable

E. If there was a $340 favorable direct materials price variance, how much did Sitka pay for the 15,400 pounds of material?

Amount paid $fill in the blank 8

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):
Standard
Standard
Standard
Quantity
X
Price
Cost
Direct materials
3 pounds
$4.50 per pound
$13.50
Direct labor
2.00 hours
12.00 per hour
24.00
Total cost
$37.50
Sitka Industries made 2,900 ladders in July and used 8,600 pounds of material to make these units. Sitka Industries bought 15,400 pounds of material in the current
period. There was a $250 unfavorable direct materials price variance.
Enter all amounts as positive numbers.
A. How much in total did Sitka pay for the 15,400 pounds?
Amount paid $
B. What is the direct materials quantity variance?
Direct materials quantity variance $
Favorable
C. What is the total direct materials cost variance?
Total direct materials cost variance $
Favorable
D. What if 9,300 pounds were used to make these ladders, what would be the direct materials quantity variance?
Direct materials quantity variance $
Unfavorable v
E. If there was a $340 favorable direct materials price variance, how much did Sitka pay for the 15,400 pounds of material?
Amount paid $

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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