Scarlett Company has a direct materials standard of 3 gallons of input at a standard price of $20.00 per gallon. During July, Scarlett Company purchased and used 7,540 gallons at an actual price of $19.60 to produce 1,700 units. What is the direct materials price variance? Multiple Choice $3,016 favorable $2,480 favorable $3,016 unfavorable $750 unfavorable
Scarlett Company has a direct materials standard of 3 gallons of input at a standard price of $20.00 per gallon. During July, Scarlett Company purchased and used 7,540 gallons at an actual price of $19.60 to produce 1,700 units. What is the direct materials price variance? Multiple Choice $3,016 favorable $2,480 favorable $3,016 unfavorable $750 unfavorable
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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:Scarlett Company has a direct materials standard of 3 gallons of input at a standard price of $20.00 per gallon. During July, Scarlett Company purchased
and used 7,540 gallons at an actual price of $19.60 to produce 1,700 units. What is the direct materials price variance?
Multiple Choice
$3,016 favorable
$2,480 favorable
$3,016 unfavorable
$750 unfavorable
Transcribed Image Text:Scarlett Company has a direct materials standard of 3 gallons of input at a standard price of $20.00 per gallon. During July, Scarlett Company purchased
and used 7,540 gallons at an actual price of $19.60 to produce 1,700 units. What is the direct materials price variance?
Multiple Choice
$3,016 favorable
$2,480 favorable
$3,016 unfavorable
$750 unfavorable
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