Precilla Company uses a standard costing system that allows 2.0 pounds of direct materials for one finished
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Question:
Precilla Company uses a standard costing system that allows 2.0 pounds of direct materials for one finished unit of product. During July, the company purchased 40,000 pounds of direct materials for $210,000, and manufactured 12,000 finished units. The standard direct materials cost allowed for the units manufactured is $120,000. The performance report shows that Precilla has an unfavorable direct materials usage variance of $5,000. Also, the company records any price variance for materials at time of purchase.
Precilla's standard price per pound of direct materials (SP), to two decimal places, is
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