Costless Corporation produces only one product. The standard material cost for that product is 6 gallons at $11.50 per gallon. During August, the company made 9,400 units of product and used 25,750 gallons. The actual price for materials was $10.50 per gallon. Which of the following is true? The materials quantity variance is $378,225 unfavorable. The materials quantity variance is $352,475 favorable. The materials quantity variance is $25,750 unfavorable. The materials quantity variance is $378,225 favorable.
Costless Corporation produces only one product. The standard material cost for that product is 6 gallons at $11.50 per gallon. During August, the company made 9,400 units of product and used 25,750 gallons. The actual price for materials was $10.50 per gallon. Which of the following is true? The materials quantity variance is $378,225 unfavorable. The materials quantity variance is $352,475 favorable. The materials quantity variance is $25,750 unfavorable. The materials quantity variance is $378,225 favorable.
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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Question
Costless Corporation produces only one product. The standard material cost for that product is 6 gallons at $11.50 per gallon. During August, the company made 9,400 units of product and used 25,750 gallons. The actual price for materials was $10.50 per gallon. Which of the following is true?
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The materials quantity variance is $378,225 unfavorable.
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The materials quantity variance is $352,475 favorable.
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The materials quantity variance is $25,750 unfavorable.
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The materials quantity variance is $378,225 favorable.
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