Last month Zed Co purchased 750kg of raw materials for $13,500. The material price variance was $1,120 favourable.
What was the standard price per kg of the raw materials?
The correct answer is: $19.50
This is a question in which you have to work backwards.
750 kg should have cost (x $p)
But did cost
Material price variance
The 750kg should have cost $13,500 + $1,125 = $14,635
The standard cost per kg is therefore $14,625/750 = $19.50
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