Sunland Industries uses a standard cost system in which direct material is carried at standard cost. Sunland has established the following standards: standard quantity of 10 pounds per unit, standard price $1.80 per pound. During January, Sunland purchased 164,000 pounds of direct material at a cost of $312,000 and used 184,500 pounds in production of 19,500 units. Calculate the direct materials quantity variance and indicate whether the variance is favorable or unfavorable. Direct materials quantity variance $ Favorable
Sunland Industries uses a standard cost system in which direct material is carried at standard cost. Sunland has established the following standards: standard quantity of 10 pounds per unit, standard price $1.80 per pound. During January, Sunland purchased 164,000 pounds of direct material at a cost of $312,000 and used 184,500 pounds in production of 19,500 units. Calculate the direct materials quantity variance and indicate whether the variance is favorable or unfavorable. Direct materials quantity variance $ Favorable
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:Sunland Industries uses a standard cost system in which direct material is carried at standard cost. Sunland has established the
following standards: standard quantity of 10 pounds per unit, standard price $1.80 per pound. During January, Sunland purchased
164,000 pounds of direct material at a cost of $312,000 and used 184,500 pounds in production of 19,500 units.
Calculate the direct materials quantity variance and indicate whether the variance is favorable or unfavorable.
Direct materials quantity variance
$
+A
Favorable
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