Exercise 17-24 (Algo) Variable Cost Variances: Materials Purchased and Materials Used Are Not Equal (LO 17-2) The cost analyst for Sheffer Systems collected the following data concerning direct materials: Actual production Direct materials purchased (actual) Standard cost of materials purchased Standard direct materials costs per unit produced Standard price times actual amount of materials used. Direct Materials variance 37,100 units Efficiency variance Total direct materials cost variance $ 718,500 723,300 17 Required: Compute the direct materials cost variances. Note: Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. 648,200
Exercise 17-24 (Algo) Variable Cost Variances: Materials Purchased and Materials Used Are Not Equal (LO 17-2) The cost analyst for Sheffer Systems collected the following data concerning direct materials: Actual production Direct materials purchased (actual) Standard cost of materials purchased Standard direct materials costs per unit produced Standard price times actual amount of materials used. Direct Materials variance 37,100 units Efficiency variance Total direct materials cost variance $ 718,500 723,300 17 Required: Compute the direct materials cost variances. Note: Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. 648,200
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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:Exercise 17-24 (Algo) Variable Cost Variances: Materials Purchased and Materials Used Are Not Equal
(LO 17-2)
The cost analyst for Sheffer Systems collected the following data concerning direct materials:
Actual production
Direct materials purchased (actual)
Standard cost of materials purchased
Standard direct materials costs per unit produced
Standard price times actual amount of materials used.
Direct Materials
variance
37,100 units
Required:
Compute the direct materials cost variances.
Note: Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select
either option.
Efficiency variance
Total direct materials cost variance
$ 718,500
723,300
17
648,200
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