A manufactured product has the following information for June. Standard Actual Direct materials 7 lbs. @ $9 per lb. 55,000 lbs. @ $9.10 per lb. Direct labor 2 hrs. @ $15 per hr. 15,200 hrs. @ $15.50 per hr. Overhead 2 hrs. @ $12 per hr. $ 192,300 Units manufactured 7,800 Compute the direct materials price variance and the direct materials quantity variance. (Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Round "Cost per unit" answers
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 manufactured product has the following information for June. Standard Actual Direct materials 7 lbs. @ $9 per lb. 55,000 lbs. @ $9.10 per lb. Direct labor 2 hrs. @ $15 per hr. 15,200 hrs. @ $15.50 per hr.
Compute the direct materials price variance and the direct materials quantity variance.
(Indicate the effect of each variance by selecting for favorable, unfavorable, and no variance. Round "Cost per unit" answers
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