ECONOMICS

Detailed explanation-1: -The standard price per unit of direct materials should reflect the final delivery cost of the materials, net of any discounts. A favorable variance is recorded in the accounting records as a credit. The difference between the standard cost of the product and its actual cost is called variance.

Detailed explanation-2: -Standard price per unit of direct materials is the price that should be paid for a single unit of materials, including allowances for quality, quantity purchased, shipping, receiving, and other such costs, net of any discounts allowed.

Detailed explanation-3: -The standard price per unit for direct materials should reflect the final, delivered cost of the materials, net of any discounts taken. The standard price is for a particular grade of material, purchased in particular lot sizes, and delivered by a particular type of carrier.

Detailed explanation-4: -Option (D) is the correct answer. Standard cost is used as the tool for measuring efficiency for controlling the cost of production. Standard cost is part of the cost accounting process. The variances are not being closed and transferred to the sales revenue account in the standard costing system.

Detailed explanation-5: -To determine these costs, you’ll need to multiply the rate of each by the quantity (in units or hours). For example, if the direct materials price is $10 and the standard quantity is 20 pounds per unit, you would multiply $10 by 20 to get $200. This would be the standard cost for the direct materials only.