In performing Variance Analysis for Direct Material costs, the variances include Price and Rate Variances. TRUE FALSE

Q: Explain why a favorable sales-quantity variance occurs.

A: Explain the reason for the occurrence of favorable sales quantity variance:When actual sales exceed…

Q: Explain the difference between a favorable and an unfavorable variance.

A: Variance: The term variance is used under standard costing system. Variance is actually the…

Q: Distinguish between a favorable variance and an unfavorable variance.

A: Favorable Variance: Favorable variance is the variation in the actual and planned output which is…

Q: The variance analysis is used   Ratio Analysis Standard costing Budgetary control Marginal costing

A: Variance analysis is used to estimate the difference between the expected value and the actual…

Q: Variance analysis SIS

A: Under variance analysis a standard is set for all costs, revenues etc. and this is compared with the…

Q: 2. Yellow Ltd, a food manufacturer, is reviewing its operation for March 2021. The company produces…

A: Variance analysis is very important technique of comparing budgeted costs with actual costs in order…

Q: How can the sales-quantity variance be decomposed further?

A: Sales quantity variance identifies the difference between budgeted contribution margin based on…

Q: Determine the following: a. Total material price variance b. Total material usage (quantity)…

A: d) Calculation of standard hours: It is given that the number of units produced is 850 units and…

Q: From the perspective of control, the direct materials price variance should be isolated at the time…

A: Direct material price variance is one of the variance being used in business. This shows difference…

Q: Gross profit volume variance is derived by

A: The formula for calculating gross profit volume variance is: Gross Profit Volume Variance = (Actual…

Q: what are the possible causes of favourable material price variance

A: The difference between the actual price paid for materials used in production and the standard price…

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.