A company provided the following direct materials cost information. Compute the total direct materials variance. Standard costs assigned: Direct materials standard cost (420,000 units @ $6.00/unit)$ 2,520,000Actual costs: Direct materials costs incurred (418,750 units @ $6.20/unit)$ 2,596,250

Variance is the result of the difference between the budgeted value and actual results. It is used…

Answered: A company provided the following direct…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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A company provided the following direct materials cost information. Compute the total direct materials variance.

Standard costs assigned:
Direct materials standard cost (420,000 units @ $6.00/unit)	$ 2,520,000
Actual costs:
Direct materials costs incurred (418,750 units @ $6.20/unit)	$ 2,596,250

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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