Q10 Empty Company maintains no inventories and has the following data pertaining to one of its direct materials in July: Standard quantity of direct materials for the units manufactured (SQ) 31,600 Direct materials purchases—actual cost $ 98,000 Standard price per unit of direct materials (SP) $ 3.00 Direct material efficiency variance—favorable $ 6,100 All materials purchased during the month were issued to production. What was the direct materials price variance for July? Multiple Choice $9,300 unfavorable. $2,900 favorable. $3,200 unfavorable. $9,300 favorable. $3,200 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.
Q10
Empty Company maintains no inventories and has the following data pertaining to one of its direct materials in July:
| Standard quantity of direct materials for the units manufactured (SQ) | 31,600 |
|---|---|
| Direct materials purchases—actual cost | $ 98,000 |
| Standard price per unit of direct materials (SP) | $ 3.00 |
| Direct material efficiency variance—favorable | $ 6,100 |
All materials purchased during the month were issued to production.
What was the direct materials price variance for July?
-
$9,300 unfavorable.
-
$2,900 favorable.
-
$3,200 unfavorable.
-
$9,300 favorable.
-
$3,200 favorable.
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