Direct Materials Variances I-Time, Inc., produces electronic timepieces. The company uses mini-LCD displays for its products. Each timepiece uses one display. The company produced 450 timepieces during October. However, due to LCD defects, the company actually used 470 LCD displays during October. Each display has a standard cost of $6.7. The company purchased 470 LCD displays for October production at a cost of $2,825. Determine the price variance, quantity variance, and total direct materials cost variance for October. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Price variance $ Favorable Quantity variance $ Total direct materials cost variance $ I need helping to figure out steps to get each one. Please give me step by step instruction for review... Liz C
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.
Direct Materials Variances
I-Time, Inc., produces electronic timepieces. The company uses mini-LCD displays for its products. Each timepiece uses one display. The company produced 450 timepieces during October. However, due to LCD defects, the company actually used 470 LCD displays during October. Each display has a
Determine the price variance, quantity variance, and total direct materials cost variance for October.
Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.
| Price variance | $ | Favorable |
| Quantity variance | $ | |
| Total direct materials cost variance | $ |
I need helping to figure out steps to get each one. Please give me step by step instruction for review...
Liz C
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
