the following is a worked example in the text and i dont get it at all
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- purchases of materials are recorded at std cost
- direct material costs and direct labor are variable
- POH are fixed and absorbed using direct labor hours.
Actual and budgeted data for last month is as follows:
- budgeted direct materials/unit is 2 kg at$5/kg
- direct labor 0.5 hours/unit
- budgeted prod 10,000
- 22,500 kg of materials were purchased
- total standard cost of materials was 115,000
- 6000 direct labor hours were worked at $6/hr
- budgeted fixed POH were 240,000
- actual fixed POH were 260,000
- material price variance 11,250 A
- labor efficiency var 1750 A
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the above is verbaturm
question: how many widgets were produced?
this was the first part (1/10) and i cd not get it. It simply says 11,500 were produced.
i am doing:
u purchased 22,500 kgs, which means u used an extra 2500 kg in production.
that means 25000/2 - 1250 extra units were produced, making a total of 11,250.
where am i going wrong?