Sheffield Company budgeted the following cost standards for the current year: Direct materials (2 kg of plastic at $5.00 per kilogram) Direct labour (2 hours at $11 per hour) Variable manufacturing overhead Fixed manufacturing overhead Total standard cost per unit Actual costs for producing 2,650 units were as follows: Direct materials used Direct materials purchased (6,710 kg) Direct labour (6,850 hours) Variable manufacturing costs Fixed manufacturing costs (a) Materials price variance 5.600 k $ $32,879 $62,335 $32,000 $17,100 Calculate the materials price variance for materials purchased. (Round per unit calculations to 2 decimal places, eg 1.25 and final answers to O decimal places, e.g. 125.) $10.00 22.00 11.05 7.25 $50.30
Sheffield Company budgeted the following cost standards for the current year: Direct materials (2 kg of plastic at $5.00 per kilogram) Direct labour (2 hours at $11 per hour) Variable manufacturing overhead Fixed manufacturing overhead Total standard cost per unit Actual costs for producing 2,650 units were as follows: Direct materials used Direct materials purchased (6,710 kg) Direct labour (6,850 hours) Variable manufacturing costs Fixed manufacturing costs (a) Materials price variance 5.600 k $ $32,879 $62,335 $32,000 $17,100 Calculate the materials price variance for materials purchased. (Round per unit calculations to 2 decimal places, eg 1.25 and final answers to O decimal places, e.g. 125.) $10.00 22.00 11.05 7.25 $50.30
Chapter1: Financial Statements And Business Decisions
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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:Sheffield Company budgeted the following cost standards for the current year:
Direct materials (2 kg of plastic at $5.00 per kilogram)
Direct labour (2 hours at $11 per hour)
Variable manufacturing overhead
Fixed manufacturing overhead
Total standard cost per unit
Actual costs for producing 2,650 units were as follows:
Direct materials used
Direct materials purchased (6,710 kg)
Direct labour (6,850 hours)
Variable manufacturing costs
Fixed manufacturing costs
(a)
Materials price variance
5.600 k
$
$32,879
$62,335
$32,000
$17,100
Calculate the materials price variance for materials purchased. (Round per unit calculations to 2 decimal places, eg 1.25 and final
answers to O decimal places, e.g. 125.)
$10.00
22.00
11.05
7.25
$50.30
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