Standards established for a particular raw material used by Han Company are as follows: Standard quantity per unit of output - 1kg. Standard price is P16.60 /kg. Data pertaining to last month's are: Actual materials purchased - 2,200 kg Actual purchases cost - P34,650 Actual materials used - 1,900 kg Actual output - 2,100 units. The materials quantity variance for the month must be? Indicate also if the answer is Favorable or Unfavorable.
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.
Standards established for a particular raw material used by Han Company are as follows:
Standard quantity per unit of output - 1kg.
Standard price is P16.60 /kg.
Data pertaining to last month's are:
Actual materials purchased - 2,200 kg
Actual purchases cost - P34,650
Actual materials used - 1,900 kg
Actual output
- 2,100 units.
The materials quantity variance for the month must be? Indicate also if the answer is Favorable or Unfavorable.
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