LO 8.2Ed Co. manufactures two types of O rings, large and small. Both rings use the same material but require different amounts. Standard materials for both are shown. Rubber Large 3 feet at $0.25 per foot Small 1.25 feet at $0.25 per foot Connector 1 at $0.03 1 at $0.03 At the beginning of the month, Ed Co. bought 25,000 feet of rubber for $6,875. The company made 3,000 large O rings and 4,000 small O rings. The company used 14,500 feet of rubber. A. What are the direct materials price variance, the direct materials quantity variance, and the total direct materials cost variance? B. If they bought 10,000 connectors costing $310, what would the direct materials price variance be for the connectors? C. If there was an unfavorable direct materials price variance of $125, how much did they pay per foot for the rubber?
LO 8.2Ed Co. manufactures two types of O rings, large and small. Both rings use the same material but require different amounts. Standard materials for both are shown. Rubber Large 3 feet at $0.25 per foot Small 1.25 feet at $0.25 per foot Connector 1 at $0.03 1 at $0.03 At the beginning of the month, Ed Co. bought 25,000 feet of rubber for $6,875. The company made 3,000 large O rings and 4,000 small O rings. The company used 14,500 feet of rubber. A. What are the direct materials price variance, the direct materials quantity variance, and the total direct materials cost variance? B. If they bought 10,000 connectors costing $310, what would the direct materials price variance be for the connectors? C. If there was an unfavorable direct materials price variance of $125, how much did they pay per foot for the rubber?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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:LO 8.2Ed Co. manufactures two types of O
rings, large and small. Both rings use the
same material but require different
amounts. Standard materials for both are
shown.
Rubber
Large
3 feet at
$0.25 per
foot
Small
1.25 feet at
$0.25 per
foot
Connector 1 at $0.03
At the beginning of the month, Ed Co.
bought 25,000 feet of rubber for $6,875.
The company made 3,000 large O rings
and 4,000 small O rings. The company
used 14,500 feet of rubber.
1 at $0.03
A. What are the direct materials price
variance, the direct materials quantity
variance, and the total direct materials
cost variance?
B. If they bought 10,000 connectors
costing $310, what would the direct
materials price variance be for the
connectors?
C. If there was an unfavorable direct
materials price variance of $125, how
much did they pay per foot for the
rubber?
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