Oklahoma Manufacturing Company uses a standard cost accounting system. In 2012, the company produced 28,500 units. Each unit took several pounds of direct materials and 1½ standard hours of direct labor at a standard hourly rate of $13.00. Normal capacity was 49,960 direct labor hours. During the year, 130,900 pounds of raw materials were purchased at $0.95 per pound. All materials purchased were used during the year. (a) If the materials price variance was $1,309 favorable, what was the standard materials price per pound? Oklahoma Manufacturing Company uses a standard cost accounting system. In 2012, the company produced 28,500 units. Each unit took several pounds of direct materials and 1½ standard hours of direct labor at a standard hourly rate of $13.00. Normal capacity was 49,960 direct labor hours. During the year, 130,900 pounds of raw materials were purchased at $0.95 per pound. All materials purchased were used during the year. Solution Purchase price variance = (Actual price - Standard Price) x Actual quantity Standard Price = Purchase price variance/actual quantity - Actual Price = $1309/130900 + $0.95 =$0.01+0.95 = $0.96 Standard Price is $0.96 per pound.