During the month of March, Baker's Express purchased 10,000 pounds of flour at $1 per pound. At the end of March, Baker's Express found that it had a favorable materials price variance of $500. The standard cost per pound must be: a. $1.95. b. $1.05. c. $0.95. d. $1.00.
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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.
During the month of March, Baker's Express purchased 10,000 pounds of flour at $1 per pound. At the end of March, Baker's Express found that it had a favorable materials price variance of $500. The standard cost per pound must be:
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- Use the following standard cost card for 1 gallon of ice cream to answer the questions. Actual direct costs incurred to make 50 gallons of ice cream: 275 quarts of cream at $1.05 per quart 832 ounces of sugar at $0.075 per ounce 165 minutes of labor at $37 per hour All material used was bought during the current period. A. Compute the material and labor variances. B. Comment on the results and possible causes of the variances.Smith Industries uses a cost system that carries direct materials inventory at a standard cost. The controller has established these standards for the cost of one basket (unit): Smith Industries made 3,000 baskets in July and used 15,500 pounds of material to make these units. Smith Industries paid $39,370 for the 15,500 pounds of material. A. What was the direct materials price variance for July? B. What was the direct materials quantity variance for July? C. What is the total direct materials cost variance? D. If Smith Industries used 15,750 pounds to make the baskets, what would be the direct materials quantity variance?Joyous Company purchases 12,000 pounds of materials. The materials price variance is P6,000 favorable. What is the difference between the standard and actual price paid for the materials? A. 1.00 B. 0.50 C. 2.00 D. 6.00
- Yong Trading has the following standard cost for its product: Direct material - 5 kg x $28/kg Direct labour - 6.5 hours x $33/hour Additional information for the month of January 2020: Units made - 1,300 Direct material bought - 2,450 kg for $63,700 Direct material used - 7,100 kg Direct labour - 6,300 hours (direct labour cost of $195,300 Requirements: a ) Calculate 1)Direct material price variance 2)Direct material quantity variance 3)Direct Labour rate variance 4) Direct labour efficiency variance determine whether each variance if favourable or unfavourable. b) why favorable direct labour efficiency variance occur? c) Discuss the usefulness of variance analysis to this company.A Company has a material standard of 1 pound per unit of output. Each pound has a standard price of $25 per pound. During July, A Company paid $127,250 for 4,950 pounds, which they used to produce 4,700 units. What is the direct material price variance?Use the following information to answer questions 15 and 16. A company has the following information in its standard cost card: £ = 7.00 Material 2.5kg at the price of £3/kg During the month the company recorded the following: Units produced Material used Material cost 2,500 units 7,850kg £23,180 %3D 15. Calculate the material price variance. 16. Calculate the material usage variance.
- The company produces a single product and has prepared the following standard cost sheet for one unit of the product. • DM 8 pounds at $2.50 per pound During the month, the company manufactures 240 units and incurs the following actual costs.• Direct material purchase and used 1,900 pounds at a cost of $2.65 per pound A. Calculate the Direct Material price varianceB. Calculate the Direct Material quantity varianceC. Calculate the Total Direct Material cost varianceIn December, Sam Antari, president of Antari Inc., received the following information from Denise Sweet, the new controller, in regard to November production of travel bags:November production ............ 4,800 bagsActual cost of material purchased and used .. $14,550Standard material allowed ........... 0.5 square yard per bag Material quantity variance .......... $600 UStandard price per yard of material ......... $6Actual hours worked ............ 9,760 hoursStandard labor time per bag .......... 2 hoursLabor rate variance ............. $1,464 FStandard labor rate per hour .......... $17Antari asked Sweet to provide the following information:d. Labor efficiency variance.e. Standard prime (direct material and direct labor) cost to produce one travel bag.f. Actual cost to produce one travel bag in November.In December, Sam Antari, president of Antari Inc., received the following information from Denise Sweet, the new controller, in regard to November production of travel bags:November production ............ 4,800 bagsActual cost of material purchased and used .. $14,550Standard material allowed ........... 0.5 square yard per bag Material quantity variance .......... $600 UStandard price per yard of material ......... $6Actual hours worked ............ 9,760 hoursStandard labor time per bag .......... 2 hoursLabor rate variance ............. $1,464 FStandard labor rate per hour .......... $17Antari asked Sweet to provide the following information:g. An explanation for the difference between standard and actual cost; be sure that the explanation is consistent with the pattern of the variances.
- In December, Sam Antari, president of Antari Inc., received the following information from Denise Sweet, the new controller, in regard to November production of travel bags:November production ............ 4,800 bagsActual cost of material purchased and used .. $14,550Standard material allowed ........... 0.5 square yard per bag Material quantity variance .......... $600 UStandard price per yard of material ......... $6Actual hours worked ............ 9,760 hoursStandard labor time per bag .......... 2 hoursLabor rate variance ............. $1,464 FStandard labor rate per hour .......... $17Antari asked Sweet to provide the following information:a. Standard quantity of material allowed for November production.b. Standard direct labor hours allowed for November production.c. Material price variance.The standard price for material 3-291 is $3.65 per liter. During November, 2,000 liters were purchased at $3.60 per liter. The quantity of material 3-291 issued during the month was 1775 liters and the quantity allowed for November production was 1,825 liters. Calculate materials price varianceRiza Company uses a standard cost system. Information for raw materials for Product DEF for the month of August follows:Standard price per pound of raw materials $1.60Actual purchase price per pound of raw materials $1.55Actual quantity of raw materials purchased 2,000 poundsActual quantity of raw materials used 1,900 poundsStandard quantity allowed for actual production 1,800 poundsQuestion: What is the materials purchase price variance? (label whether favorable or unfavorable; no dollar sign and comma)