Melrose Corporation makes a product that uses a material with the following standards: C Standard quantity... Standard price. 8.4 pounds per unit $6.00 per pound Standard cost. $50.40 per unit The company budgeted for production of 5,800 units in September, but actual production was 5,900 units. The company used 50,210 pounds of direct material to produce this output. The company purchased 55,100 pounds of the direct material at $5.80 per pound. The direct materials purchases variance is computed when the materials are purchased. The materials price variance for September is:
Melrose Corporation makes a product that uses a material with the following standards: C Standard quantity... Standard price. 8.4 pounds per unit $6.00 per pound Standard cost. $50.40 per unit The company budgeted for production of 5,800 units in September, but actual production was 5,900 units. The company used 50,210 pounds of direct material to produce this output. The company purchased 55,100 pounds of the direct material at $5.80 per pound. The direct materials purchases variance is computed when the materials are purchased. The materials price variance for September is:
Chapter1: Financial Statements And Business Decisions
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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:Melrose Corporation makes a product
that uses a material with the following
standards:
Standard quantity..
8.4
pounds per unit
Standard price..
$6.00
per pound
Standard cost..
$50.40
per unit
The company budgeted for production
of 5,800 units in September, but actual
production was 5,900 units. The
company used 50,210 pounds of direct
material to produce this output. The
company purchased 55,100 pounds of
the direct material at $5.80 per pound.
The direct materials purchases
variance is computed when the
materials are purchased.
The materials price variance for
September is:
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