Oxford Co. has a materials standard of 2.1 pounds per unit of output. Each pound has a standard price of $13 per pound. During February, Oxford Co. paid $57,700 for 4,910 pounds, which were used to produce 2,470 units. What is the direct materials price variance? Multiple Choice $6,130 unfavorable $6,690 favorable $6,690 unfavorable $6,130 favorable
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.
Oxford Co. has a materials standard of 2.1 pounds per unit of output. Each pound has a standard price of $13 per pound. During February, Oxford Co. paid $57,700 for 4,910 pounds, which were used to produce 2,470 units. What is the direct materials price variance?
Multiple Choice
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$6,130 unfavorable
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$6,690 favorable
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$6,690 unfavorable
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$6,130 favorable
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