Allen Company’s master budget called for 50,000 units of production. Budgeted direct material costs at this level were $450,000 or $9 per unit. Allen actually produced 54,000 units and incurred direct material costs of $496,000. What is Allen’s direct material variance using flexible budgeting?
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.
Allen Company’s
What is Allen’s direct material variance using flexible budgeting?
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