Tulia Company manufactures agricultural implements. At thebeginning of the third quarter of 2018, the company had planned toproduce 400 units of output during the quarter; this level ofdemand was considered “normal” for the period and reflected theaverage demand in the third quarter for the previous three years.However, a marketing decision by Tulia’s management to cut pricesby 5 percent during the quarter led to an uptick in demand, withthe result that the company increased production to 450 units forthe quarter. The company tracks four factory inputs: directmaterials, direct labor, variable factory overhead, and fixedfactory overhead. Both variable and fixed factory overhead areapplied using predetermined rates based on direct labor hours. Foreach of the following cost components, an examination of therecords revealed the following amounts:
Direct materials: Standard cost per unit of direct materials:$3.50 per pound.
Direct materials price variance: $350 U.
Total pounds of standard direct materials allowed for the actualoutput achieved: 2,700 pounds. Direct materials quantity variance:$70 U. Actual quantity of direct material purchased: 3,500pounds.
1. Compute the following amounts (make sure you indicate thedirection of any variance computed):
a. Standard cost of direct material allowed per unit of output:$_______________ .
b. Actual cost per pound of direct materials purchased:$_______________.
c. Actual quantity of materials used in production:_______________ pounds.
