A favorable direct materials price variance and an unfavorable direct materials quantity variance might indicate which of the following? More expensive, superior materials requiring more than the standard amount were used in production. Less expensive, inferior materials requiring more than the standard amount were used in production. Less expensive, inferior materials requiring less than the standard amount were used in production. More expensive, superior materials requiring less than the standard amount were used in production.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
A favorable direct materials price variance and an unfavorable direct materials quantity variance might indicate which of the following?
More expensive, superior materials requiring more than the standard amount were used in production. |
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Less expensive, inferior materials requiring more than the standard amount were used in production. |
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Less expensive, inferior materials requiring less than the standard amount were used in production. |
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More expensive, superior materials requiring less than the standard amount were used in production. |
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