Light Company manufactures product Alpha and the following information has been provided for the month of December: Standard costs: Direct material C 4 kg @ sh. 80 Direct material D 6 kg @ sh. 40 Actual data: Direct material C 30,000kg @sh. 82 Direct material D 16,000kg @sh. 36 Actual number of units were 8,000 units. Required: What is the material yield 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.
. Light Company manufactures product Alpha and the following information has been provided for the month of December:
Direct material C 4 kg @ sh. 80
Direct material D 6 kg @ sh. 40
Actual data:
Direct material C 30,000kg @sh. 82
Direct material D 16,000kg @sh. 36
Actual number of units were 8,000 units.
Required:
What is the material yield variance?
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