aterials 1.2 yards per scarf $4.60 per yard Direct labor 0.15 hours per scarf $11.00 per hour The company used 985 yards of material in order to make 800 scarve
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.
Scotto Designs has the following standards for the production of scarves:
Standard Quantity Standard Price
Direct materials 1.2 yards per scarf $4.60 per yard
Direct labor 0.15 hours per scarf $11.00 per hour
The company used 985 yards of material in order to make 800 scarves in April. The company purchased 1,100 yards at $4.70 per yard. How much is the direct materials quantity variance?
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$110 favorable |
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$117.50 unfavorable |
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$8 unfavorable |
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$705 unfavorable |
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$115 unfavorable |
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