BQ Inc. is employing standard costing for its product. For the year ended December 31, 20x0, it provided the following data: During the year, the company acquired 1,500 units of direct materials at a total cost of P15,000. The journal entry to record the material variance during the year includes a credit to material usage variance in the amount of P700. The standard direct material is P5 per product. The company manufactured 200 units of product using 900 direct materials.   The journal entry to record the material price variance will include a Debit to material price variance of P4,500 Debit to material price variance of P2,700 Credit to material price variance of P10,500 Credit to material price variance of P6,300

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A:

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A: Explanation:

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.