Problem 4: Singh Corporation makes a product with the following standard costs for a raw material used in its production: Standard quantity of the material Standard price of the material The following data pertain to a recent month's operations: Actual material purchased Actual cost of material purchased! Actual material used in production Actual output 6 meters per unit produced $15 per meter 3,600 meters $ 60,780 3,200 meters 530 units produced The direct materials purchases variance is computed when the materials are purchased. The direct materials quantity variance is computed when the materials are used. Required: a. What is the materials price variance for the month? b. What is the materials quantity variance for the month? c. Which variances, if any, do you believe the corporation should investigate? Why?
Problem 4: Singh Corporation makes a product with the following standard costs for a raw material used in its production: Standard quantity of the material Standard price of the material The following data pertain to a recent month's operations: Actual material purchased Actual cost of material purchased! Actual material used in production Actual output 6 meters per unit produced $15 per meter 3,600 meters $ 60,780 3,200 meters 530 units produced The direct materials purchases variance is computed when the materials are purchased. The direct materials quantity variance is computed when the materials are used. Required: a. What is the materials price variance for the month? b. What is the materials quantity variance for the month? c. Which variances, if any, do you believe the corporation should investigate? Why?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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:Problem 4:
Singh Corporation makes a product with the following standard costs for a raw material used in
its production:
Standard quantity of the material
Standard price of the material
The following data pertain to a recent month's operations:
Actual material purchased
Actual cost of material purchased
Actual material used in production
Actual output
6 meters per unit produced
$15 per meter
3,600 meters
$ 60,780
3,200 meters
530 units produced
The direct materials purchases variance is computed when the materials are purchased.
The direct materials quantity variance is computed when the materials are used.
Required:
a. What is the materials price variance for the month?
b. What is the materials quantity variance for the month?
c. Which variances, if any, do you believe the corporation should investigate? Why?
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