Answer:
Material price variance
= (Standard price - Actual price) x Actual quantity purchased
500 = (SP - $1.00) x 10,000
500 = 10,000SP - $10,000
$500 + $10,000 = 10,000SP
$10,500 = 10,000SP
$10,500 = SP
10,000
SP = $1.05
The standard cost per pound is $1.05
Explanation:
Material price variance is the difference between standard price and actual price multiplied by actual quantity purchased. The material price variance, actual price and actual quantity purchased have been given with the exception of standard price. Thus, standard price is made the subject of the formula, which implies that we are solving for standard price.
During March, Baker's express purchases 10,000 pounds of flour at $1 per round. At the end of March, Baker's express found that it had a favorable materials price variance of $500. The standard cost per pound is $1.05.
The standard cost refers to the estimated cost of a process or resource that is used in the manufacturing enterprise compared with the actual cost.
As favorable materials price variance is $500 and bakers express purchased 10,000 pounds of flour at $1 per pound. The standard cost per round will be $1.05 ($10,500/10,000).
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