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EggzonMobul Incorporated uses Chemical X to manufacture oil products. Variance data for the month follows (F indicates a favorable variance, U indicates unfavorable variance):
Chemical X
Materials Price Variance
$84,000 F
Materials Efficiency Variance
80,000 U
Net Materials Variance
4,000 F
The allowed quantity given the production of oil products
200,000 lbs.
The budget allowed one pound of Chemical X for each pound of oil product requiring Chemical X. For Chemical X, the average price paid was $.40 per pound less than standard. The company purchased and used all of Chemical X in the given period.
a) Calculate the number of pounds of Chemical X purchased.
b) Calculate the standard cost per pound of Chemical X.
c) Calculate the total standard material cost for Chemical X.
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