Ferguson Inc. has provided the following budgeted data for the current month: Budgeted Data Data Amounts Budgeted production units 2,500 units Standard material per unit 1.8 square yards Standard price per square yards $5.60 Actual production data is as follows: Actual Production Data Data Amounts Actual production units 2,700 units Actual material used per unit 1.5 square yards Actual price per square yards $5.80 Determine the direct material quantity variance.
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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