Ceramics produces large planters to be used in urban landscaping projects. A special earth clay is used to make the planters. The ard quantity of clay used for each planter is 24 pounds. The company uses a standard cost of $2 30 per pound of clay Spruce ced 2.750 planters in May In that month, 68.750 pounds of clay were purchased and used at the total cost of $154.000 the requirements in by determining the formula for the price variance, then compute the price variance for the direct materials (Enter the variance as a ive number Enter currency amounts in the formula to the nearest cent and then round the final variance amount to the nearest dollar Label the variance as favorable (F) or unfavorable (U) Abbreviations used DM Direct materials) DM price variance quirement 2. Calculate the direct material quantity variance ermine the formula for the quantity variance, then compute the quantity variance for the direct materials (Enter the variance as a tive number Enter currency amounts in the formula to the nearest cent and then round the final variance amount to the nearest le dollar Label the variance as favorable (F) or unfavorable (U)) DM quantity variance
Ceramics produces large planters to be used in urban landscaping projects. A special earth clay is used to make the planters. The ard quantity of clay used for each planter is 24 pounds. The company uses a standard cost of $2 30 per pound of clay Spruce ced 2.750 planters in May In that month, 68.750 pounds of clay were purchased and used at the total cost of $154.000 the requirements in by determining the formula for the price variance, then compute the price variance for the direct materials (Enter the variance as a ive number Enter currency amounts in the formula to the nearest cent and then round the final variance amount to the nearest dollar Label the variance as favorable (F) or unfavorable (U) Abbreviations used DM Direct materials) DM price variance quirement 2. Calculate the direct material quantity variance ermine the formula for the quantity variance, then compute the quantity variance for the direct materials (Enter the variance as a tive number Enter currency amounts in the formula to the nearest cent and then round the final variance amount to the nearest le dollar Label the variance as favorable (F) or unfavorable (U)) DM 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:Spruce Ceramics produces large planters to be used in urban landscaping projects. A special earth clay is used to make the planters. The
standard quantity of clay used for each planter is 24 pounds. The company uses a standard cost of $2 30 per pound of clay Spruce
produced 2.750 planters in May. In that month, 68.750 pounds of clay were purchased and used at the total cost of $154.000
Read the requirements
Begin by determining the formula for the price variance, then compute the price variance for the direct materials (Enter the variance as a
positive number Enter currency amounts in the formula to the nearest cent and then round the final variance amount to the nearest
whole dollar Label the variance as favorable (F) or unfavorable (U) Abbreviations used DM Direct materials)
=DM price variance
Requirement 2. Calculate the direct material quantity variance
Determine the formula for the quantity variance, then compute the quantity variance for the direct materials. (Enter the variance as a
positive number Enter currency amounts in the formula to the nearest cent and then round the final variance amount to the nearest
whole dollar Label the variance as favorable (F) or unfavorable (U))
DM quantity variance
Transcribed Image Text:irem
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Requirements
1. Calculate the direct material price variance
2. Calculate the direct material quantity variance
Print
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