Lily Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the Direct materials (10 pounds at $2.70 per pound) Direct labor (6 hours at $12.00 per hour) During the month of April, the company manufactures 320 units and incurs the following actual costs. Direct materials purchased and used (1,700 pounds) Direct labor (1,940 hours) Total materials variance Compute the total, price, and quantity variances for materials and labor. Materials price variance Materials quantity variance Total labor variance $ $ $ $27.00 $72.00 LA $ $4,760 $22,892 Favorable Unfavorable Favorable Favorable
Lily Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the Direct materials (10 pounds at $2.70 per pound) Direct labor (6 hours at $12.00 per hour) During the month of April, the company manufactures 320 units and incurs the following actual costs. Direct materials purchased and used (1,700 pounds) Direct labor (1,940 hours) Total materials variance Compute the total, price, and quantity variances for materials and labor. Materials price variance Materials quantity variance Total labor variance $ $ $ $27.00 $72.00 LA $ $4,760 $22,892 Favorable Unfavorable Favorable Favorable
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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Transcribed Image Text:Lily Inc., which produces a single product, has prepared the following standard cost sheet for one unit of the product.
Direct materials (10 pounds at $2.70 per pound)
Direct labor (6 hours at $12.00 per hour)
During the month of April, the company manufactures 320 units and incurs the following actual costs.
Direct materials purchased and used (1,700 pounds)
Direct labor (1,940 hours)
Total materials variance
Compute the total, price, and quantity variances for materials and labor.
Materials price variance
Materials quantity variance
Total labor variance
Labor price variance
Labor quantity variance
$
LA
$
$27.00
$72.00
LA
LA
$4,760
$22,892
100
Favorable
Unfavorable
Favorable
Favorable
Favorable
Unfavorable
<
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