Acme Company produces a single product and uses a standard cost accounting system. Here are data regarding Acme's production activity for the current month: Actual production of finished goods Standard quantity of raw materials per unit Standard price per ounce of raw material Actual quantity of raw materials used Actual cost of raw materials purchases What is the direct materials quantity variance? 3,400 units 5.8 ounces $5 per ounce 22,000 ounces $42,300
Acme Company produces a single product and uses a standard cost accounting system. Here are data regarding Acme's production activity for the current month: Actual production of finished goods Standard quantity of raw materials per unit Standard price per ounce of raw material Actual quantity of raw materials used Actual cost of raw materials purchases What is the direct materials quantity variance? 3,400 units 5.8 ounces $5 per ounce 22,000 ounces $42,300
Chapter1: Financial Statements And Business Decisions
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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.
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am. 128.
Transcribed Image Text:Acme Company produces a single product and uses a standard cost
accounting system. Here are data regarding Acme's production activity
for the current month:
Actual production of finished goods
Standard quantity of raw materials per unit
Standard price per ounce of raw material
Actual quantity of raw materials used
Actual cost of raw materials purchases
What is the direct materials quantity variance?
$4,659 Unfavorable
$4,659 Favorable
$11,400 Unfavorable
$11,400 Favorable
3,400 units
5.8 ounces
$5 per ounce
22,000 ounces
$42,300
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