Passenger Car Truck Rubber 35 lb. per unit 78 lb. per unit Steel belts 6 lb. per unit 8 lb. per unit
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.
Direct materials purchases budget
Anticipated sales for safety Grip were 42,000 passenger car tires and 19,000 truck tires.Rubber and steel belts are used in producing passengers car and truck tires as follows:
The purchase price of rubber and steel are $1.20 and $0.80 per pound,respectively.The desired ending inventories of rubber and steel belts are 40,000 and 10,000 pounds,respectively.The estimated begining inventories for rubber and steel belts are 46,000 and 8,000 pounds,respectively.
Prepare a direct materials purchases budget for safety Grip Company for the year ended December 31,2018.
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