All Vaughin Manufacturing produces a product requiring 4 pounds of material costing $3.50 per pound . During December All Vaughn purchased 5500 pounds of material for \$18480 and used the material to produce 500 products . What was the materials price variance for December ? $875 Favorable $5355 Unfavorable $ 770 Favorable $4480 unfavorable
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.
All Vaughin Manufacturing produces a product requiring 4 pounds of material costing $3.50 per pound . During December All Vaughn purchased 5500 pounds of material for \$18480 and used the material to produce 500 products . What was the materials price variance for December ?
$875 Favorable
$5355 Unfavorable
$ 770 Favorable
$4480 unfavorable
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