Q1: Standard Cost Sheet for Schmidt Machinery Company:

Schmidt Machinery Company used 3375 pounds of aluminum in June to

manufacture 900 units. The firm paid $30 per pound during the month to
purchase aluminum. On June 1, the company had 50 pounds of
aluminum on hand. At the end of June, the firm only had 25 pounds of
aluminum in its warehouse. Schmidt spent 4,200 direct labor-hours in
June, at an average cost of $42 per hour.

Required Compute for June, Schmidt Machinery Company’s

1. Price and quantity variances for aluminum.
.Direct labor rate and efficiency variances .2

-Sol: 1

-2
Q2: SMP Company has the following operating data for the month just
complete:

Required Compute for SMP the following:

1. Purchase price per pound for direct materials.

2. Direct materials price variance.
3. Total standard quantity of direct materials allowed for units produced during
the period.
Sol:

1: Purchase price per pound=120000/40000=$3/pound

2:

price variance = ( actual price - standard price ) * actual quantity

= ( 3 - 3.5 ) * 38000 = -19000 fav.

3-

‫للوصول الى الكمية المعيارية المسموح بها لالنتاج الفعلي نطبق قانون انحراف الكمية‬

quantity variance = (actual quantity - standard quantity allowed) * standard price

6500 = ( 38000 -X ) *3.5
6500 = 133000 - 3.5X

3.5x = 133000 – 6500

X= 126500/3.5= 36143 lbs

Q3: Steinberg Company had the following direct materials costs for the
manufacturing of product T in March

Required Compute Price and quantity material variances.

quantity variance
= (actual quantity - standard quantity allowed) * standard price
= (2300 -2100) * 7.25 = 1450 unfav.

price variance = ( actual price - standard price ) * actual quantity

5
= ( 7.5 - 7.25 ) * 2300 = 75 unfav.

Q1: Agrichem manufactures Insect-Be-Gone. Each bag of the product

contains 60 pounds of direct materials. Twenty-five percent of the
materials evaporate during manufacturing. The budget allows the direct
materials to be purchased at $2.50 a pound under terms of 2/10, n/30.
The company’s stated policy is to take all available cash discounts.

Required: Determine the standard direct materials cost for one bag of
Insect-Be-Gone.

Sol.
Standard direct material cost per bag of Insect-Be-Gone
Total direct materials per unit of output = 60 lbs.
Divided by: Proportion of direct materials inputs remaining
in one unit of finished product = (1 evaporation rate) = 75%
Total standard quantity of DM inputs/unit of output 80 lbs.
Purchase price per pound x $2.50/lb.
Total DM cost/bag of output prior to purchase discount $200
Less: Purchase discount = 2% x $200 = 4
Standard direct material cost per bag of output = $196
Q2: Rusty Industries manufactures a sugar-substitute, SS–2, from a
Natural ingredient, Natura. Each 10-pound package of SS–2 is
manufactured using twelve pounds of Natura. The company has
determined the purchase price per pound of Natura to be $5.00 with a
purchase term of 3/15, n/45 and FOB, destination. Rusty has a policy of
taking all discounts offered.
Required: Determine the standard direct materials cost for one package
of SS–2.

Sol.

Determining Standard Direct Materials Cost

Total lbs. of Natura per package of SS-2 12 lbs.
Standard purchase price per pound of Natura x $5
Total purchase price before purchase discount $60
Purchase discount (3% x $60.00) 1.80
Standard direct material cost per package of SS-2 $58.20