Question 3: Calculate the variance for the given data: The standard mix to produce one unit of product is as follows: Material A 60 units @ $ 10 per unit Material B 80 units @ $ 15 per unit Material C 100 units @ $ 20 per unit During the month of July, 10 units were actually produced and consumption was as follows: Material A 640 units @ $ 7.50 per unit Material B 950 units @ $ 18.00 per unit Material C 870 units @ $ 22.50 per unit Calculate material variances.
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.
Question 3: Calculate the variance for the given data:
- The standard mix to produce one unit of product is as follows:
Material A 60 units @ $ 10 per unit
Material B 80 units @ $ 15 per unit
Material C 100 units @ $ 20 per unit
During the month of July, 10 units were actually produced and consumption was as follows:
Material A 640 units @ $ 7.50 per unit
Material B 950 units @ $ 18.00 per unit
Material C 870 units @ $ 22.50 per unit
Calculate material variances.
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