Ningning Company makes a white liquid substance that is used to cover errors made on printed documents. Ningning expects to use 4 ounces of a chemical known as Fatal per bottle of correction fluid. Fatal expected to cost P0.40 per ounce. Actual materials cost amounted to P 0.46 per ounce. Ningning expected to make and sell 1,000,000 bottles of correction fluid during the period. Actual production amounted to 900,000 bottles and 4,095,000 ounces. The materials usage variance for Fatal is: O P 245,700 unfavorable O P 245,700 favorable P 198,000 unfavorable P 198,000 favorable

Ningning Company makes a white liquid substance that is used to cover errors made on printed documents. Ningning expects to use 4 ounces of a chemical known as Fatal per bottle of correction fluid. Fatal expected to cost P0.40 per ounce. Actual materials cost amounted to P 0.46 per ounce. Ningning expected to make and sell 1,000,000 bottles of correction fluid during the period. Actual production amounted to 900,000 bottles and 4,095,000 ounces. The materials usage variance for Fatal is: O P 245,700 unfavorable O P 245,700 favorable P 198,000 unfavorable P 198,000 favorable

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FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

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Concept explainers

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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Question

The materials usage variance for Fatal is:

Ningning Company makes a white liquid substance that is used to cover
errors made on printed documents. Ningning expects to use 4 ounces of
a chemical known as Fatal per bottle of correction fluid. Fatal expected to
cost P0.40 per ounce. Actual materials cost amounted to P 0.46 per
ounce. Ningning expected to make and sell 1,000,000 bottles of
correction fluid during the period. Actual production amounted to
900,000 bottles and 4,095,000 ounces.
The materials usage variance for Fatal is:
P 245,700 unfavorable
O P 245,700 favorable
P 198,000 unfavorable
O P 198,000 favorable

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