How can I tell if it is favorable or unfavorable? The standard cost of Product B includes 2 units of direct materials at $5 per unit. During June, 16,480 units of direct material were purchased and used at a cost of $4.5 per unit to produce 9,400 units of Product B. Compute the variance requested below and indicate whether the variance is favorable or unfavorable, by indicating U or F. Place the letter by the number, DO NOT add a space. Example, if the variance is 100 unfavorable, enter 100U (DO NOT PUT 100 U) The Direct Materials price variance is $ Selected Answer: -8,240U Correct Answer: 8,240 ± 1 (F)
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.
How can I tell if it is favorable or unfavorable?
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The Compute the variance requested below and indicate whether the variance is favorable or unfavorable, by indicating U or F. Place the letter by the number, DO NOT add a space. Example, if the variance is 100 unfavorable, enter 100U (DO NOT PUT 100 U) The Direct Materials price variance is $ |
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