Oreeo Company uses a standard cost system. Information for raw materials for product G for the month of November is as follows: Standard unit price, P1.60 Actual purchase price per unit, P1.55 Actual quantity purchased, 2,000 units Standard quantity allowed for actual production, 1,800 units
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.
Oreeo Company uses a
Standard unit price, P1.60
Actual purchase price per unit, P1.55
Actual quantity purchased, 2,000 units
Standard quantity allowed for actual production, 1,800 units
What is the materials purchase price variance?
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