Materials Variances Assume that Pearle Vision uses standard costs to control the materials in its made-to-order sunglasses. The standards call for 2 ounces of material for each pair of lenses. The standard cost per ounce of material is $15.75. During July, the Santa Clara location produced 5,200 pairs of sunglasses and used 9,600 ounces of materials. The cost of the materials during July was $16.50 per ounce, and there were no beginning or ending inventories. Required a. Determine the flexible budget materials cost for the completion of the 5,200 pairs of glasses. $Answer b. Determine the actual materials cost incurred for the completion of the 5,200 pairs of glasses and compute the total materials variance. $Answer actual materials cost $AnswerAnswerUF total materials variance c. How much of the total variance was related to the price paid to purchase the materials? $AnswerAnswerUF
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.
Materials Variances
Assume that Pearle Vision uses standard costs to control the materials in its made-to-order sunglasses. The standards call for 2 ounces of material for each pair of lenses. The standard cost per ounce of material is $15.75. During July, the Santa Clara location produced 5,200 pairs of sunglasses and used 9,600 ounces of materials. The cost of the materials during July was $16.50 per ounce, and there were no beginning or ending inventories.
Required
a. Determine the flexible budget materials cost for the completion of the 5,200 pairs of glasses.
$Answer
b. Determine the actual materials cost incurred for the completion of the 5,200 pairs of glasses and compute the total materials variance.
$Answer actual materials cost
$AnswerAnswerUF total materials variance
c. How much of the total variance was related to the price paid to purchase the materials?
$AnswerAnswerUF
d. How much of the difference between the answers to requirements (a) and (b) was related to the quantity of materials used?
$AnswerAnswerUF
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