materials purchased and used 16,500 pounds The standard cost card shows that a finished product contains 4 pounds of materials. The 16,500 pounds were purchased in December at a discount of 4% from the standard price. In December, 4,000 units of finished product were manufactured. Calculate the materials variances. Identify whether each variance is favorable or unfavorable. Materials Price Variance enter number... favorable or unfavorable Materials Quantity Variance enter number... favorable or unfavorable Total Materials Variance enter number... favorable or unfavorable
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.
The following direct materials data pertain to the operations of Wright Co. for the month of December.
| Standard materials price | $5.00 per pound | ||
| Actual quantity of materials purchased and used | 16,500 pounds |
The standard cost card shows that a finished product contains 4 pounds of materials. The 16,500 pounds were purchased in December at a discount of 4% from the standard price. In December, 4,000 units of finished product were manufactured.
Calculate the materials variances. Identify whether each variance is favorable or unfavorable.
Materials Price Variance enter number... favorable or unfavorable
Materials Quantity Variance enter number... favorable or unfavorable
Total Materials Variance enter number... favorable or unfavorable
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
