To determine the standard price per unit of raw material, we use the standard cost and the amount of raw material required per bench.

Given Information

1. Total quantity of raw materials purchased: 80,000 feet
2. Total cost of materials purchased: $500,000
3. Raw material required per bench: 8 feet
4. Total benches produced: 15,000
5. Standard cost of material: $400,000
6. Unfavorable draft materials quantity balance: $10,000

Solution Steps

The standard cost of the material accounts for the expected amount spent, disregarding any variances. Since there’s an unfavorable quantity balance of $10,000, the actual quantity used for the production exceeded the standard quantity by this amount.

1. Determine total standard cost per unit of material (feet): $\text{Adjusted standard cost of material} = \text{Standard cost of material} - \text{Unfavorable variance}$ $= 400,000 - 10,000 = 390,000$

2. Calculate total raw material required per standard (expected) cost for production: Since 15,000 benches were produced, and each bench requires 8 feet of material, the expected total amount of material would be: $15,000 \times 8 = 120,000 \text{ feet}$

3. Calculate standard price per foot of raw material: Using the adjusted standard cost: $\text{Standard price per foot} = \frac{390,000}{120,000} = 3.25$

Answer

The standard price per unit (foot) of raw material is $3.25.

Would you like more details, or do you have any questions?

Here are 5 related questions:

1. What are potential causes of an unfavorable quantity variance?
2. How does the standard price per unit affect the overall production cost?
3. How would a change in material efficiency impact the material cost variance?
4. What is the role of variances in standard costing and budget analysis?
5. How could this company improve its material usage to reduce unfavorable variances?

Tip: Tracking standard costs and variances helps identify cost-saving opportunities in production processes.