Clay makes all sorts of molds. Its standard quantity of material allowed is 1 foot of wood per 1 foot of mold at a standard price of $3.00 per foot. During August, it purchased 200,000 feet of wood at a cost of $2.00 per foot, which produced only 199,000 feet of mold. Calculate the materials price variance. Group of answer choices $700,000 U $400,000 F $600,000 U $200,000 F
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.
Clay makes all sorts of molds. Its standard quantity of material allowed is 1 foot of wood per 1 foot of mold at a standard price of $3.00 per foot. During August, it purchased 200,000 feet of wood at a cost of $2.00 per foot, which produced only 199,000 feet of mold. Calculate the materials price variance.
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