Expert chemical Incorporated uses Chemical A to produce oil products. Variance data for the month follows (F indicates a favourable variance, U indicates unfavourable variance):
Materials Price Variance $84,000 F
Materials Efficiency Variance 80,000 U
Net Materials Variance 4,000 F
Allowed quantity given the production of oil products 200,000 lbs.
The budget allowed one pound of Chemical A for each pound of oil product requires Chemical A. For Chemical A, average price paid was $.40 per pound less than standard. Company purchased and used all of Chemical A in the given period.
1) Compute the number of pounds of Chemical A purchased.
2) Compute the standard cost per pound of Chemical A.
3) Compute the total standard material cost for Chemical A.