JanWay Corporation manufactures a decorative vase. The vases have a standard materials cost of 2 pounds of raw materials at $3/pound. During December 15,000 pounds of raw materials costing $3.50/pound were used in producing 3,000 vases. Calculate the materials price variance and the Materials quantity variance.
JanWay Corporation manufactures a decorative vase. The vases have a standard materials cost of 2 pounds of raw materials at $3/pound. During December 15,000 pounds of raw materials costing $3.50/pound were used in producing 3,000 vases. Calculate the materials price variance and the Materials quantity variance.
Chapter1: Financial Statements And Business Decisions
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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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- JanWay Corporation manufactures a decorative vase. The vases have a
standard materials cost of 2 pounds of raw materials at $3/pound. During December 15,000 pounds of raw materials costing $3.50/pound were used in producing 3,000 vases.- Calculate the materials price variance and the Materials quantity variance.
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