Basil Tooling uses a standard cost system to account for the costs of its one product. Standards are 4 sheets of 1/2-inch steel at $110 per sheet and 14 hours of labor at a standard wage rate of $13. During July, Basil Tooling produced 600 units. Materials purchased and used totaled 2,540 sheets at a price of $106. Payroll totaled $112,256 for 8,770 hours worked. Required: a. Calculate the direct materials price variance. Note: Do not round your intermediate calculations. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance). b. Calculate the direct materials quantity variance. Note: Indicate the effect of variance by selecting "Favorable". "Unfavorable", or "None" for no effect (i.e., zero variance). a. Price Variance b. Quantity Variance
Basil Tooling uses a standard cost system to account for the costs of its one product. Standards are 4 sheets of 1/2-inch steel at $110 per sheet and 14 hours of labor at a standard wage rate of $13. During July, Basil Tooling produced 600 units. Materials purchased and used totaled 2,540 sheets at a price of $106. Payroll totaled $112,256 for 8,770 hours worked. Required: a. Calculate the direct materials price variance. Note: Do not round your intermediate calculations. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or "None" for no effect (i.e., zero variance). b. Calculate the direct materials quantity variance. Note: Indicate the effect of variance by selecting "Favorable". "Unfavorable", or "None" for no effect (i.e., zero variance). a. Price Variance b. Quantity Variance
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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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Transcribed Image Text:Basil Tooling uses a standard cost system to account for the costs of its one product. Standards are 4 sheets of 1/2-inch steel at $110 per
sheet and 14 hours of labor at a standard wage rate of $13. During July, Basil Tooling produced 600 units. Materials purchased and
used totaled 2,540 sheets at a price of $106. Payroll totaled $112,256 for 8,770 hours worked.
Required:
a. Calculate the direct materials price variance.
Note: Do not round your intermediate calculations. Indicate the effect of variance by selecting "Favorable", "Unfavorable", or
"None" for no effect (i.e., zero variance).
b. Calculate the direct materials quantity variance.
Note: Indicate the effect of variance by selecting "Favorable". "Unfavorable", or "None" for no effect (i.e., zero variance).
a. Price Variance
b. Quantity Variance
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