The following data relating to direct materials cost for November of the current year are take from the records of Tot Toys Inc., a manufacturer of plastic toys:
Quantity of direct materials used .......... 2,000 lbs,
Actual unit price of direct materials ...... $2040 per lb,
Units of finished product manufactured ........ 460 units
Standard direct materials per unit of finished product .. 4 lbs
Direct materials quantity variance-unfavorable ...... $ 500
Direct materials price variance-favorable ........ $1,450
Determine the standard direct materials cost per unit of finished product, assuming that there was no inventory of work in process at either the beginning or the end of the month.
 

Product finished................................................................................             460   units

Standard finished product for direct materials used

      (2,000 lbs./4 lbs.)..........................................................................              500  

      Deficiency of finished product for materials used......................              (40)  units

Standard cost for direct materials:

      Quantity variance divided by deficiency of product

            for materials used ($500/40 units).........................................        $12.50

Alternate solution:

      Materials used..............................................................................          2,000 lbs.

      Price variance, favorable..............................................................        $1,450

      Price variance per lb. ($1,450/2,000 lbs.), favorable....................        $0.725

      Unit price of direct materials.......................................................                                      $2.400

      Plus price variance (favorable) per lb. .........................................                                        0.725

      Standard price per lb. ..................................................................                                      $3.125

      Pounds per unit of product..........................................................                                     ×        4

      Standard direct materials cost per unit of product......................                                      $12.50