The following data is given for the Stringer Company: Budgeted production 969 units Actual production 1,062 units Materials: Standard price per ounce $1.88 Standard ounces per completed unit 11 Actual ounces purchased and used in production 12,032 Actual price paid for materials $24,666 Labor: Standard hourly labor rate $14.73 per hour Standard hours allowed per completed unit 4.4 Actual labor hours worked 5,469.3 Actual total labor costs $83,407 Overhead: Actual and budgeted fixed overhead $1,186,000 Standard variable overhead rate $26.00 per standard labor hour Actual variable overhead costs $153,140 Overhead is applied on standard labor hours. The direct materials quantity variance is a.2,045.84 favorable b.2,045.84 unfavorable c.658.00 unfavorable d.658.00 favorable
The following data is given for the Stringer Company: Budgeted production 969 units Actual production 1,062 units Materials: Standard price per ounce $1.88 Standard ounces per completed unit 11 Actual ounces purchased and used in production 12,032 Actual price paid for materials $24,666 Labor: Standard hourly labor rate $14.73 per hour Standard hours allowed per completed unit 4.4 Actual labor hours worked 5,469.3 Actual total labor costs $83,407 Overhead: Actual and budgeted fixed overhead $1,186,000 Standard variable overhead rate $26.00 per standard labor hour Actual variable overhead costs $153,140 Overhead is applied on standard labor hours. The direct materials quantity variance is a.2,045.84 favorable b.2,045.84 unfavorable c.658.00 unfavorable d.658.00 favorable
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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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The following data is given for the Stringer Company:
| Budgeted production | 969 units |
| Actual production | 1,062 units |
| Materials: | |
| Standard price per ounce | $1.88 |
| Standard ounces per completed unit | 11 |
| Actual ounces purchased and used in production | 12,032 |
| Actual price paid for materials | $24,666 |
| Labor: | |
| Standard hourly labor rate | $14.73 per hour |
| Standard hours allowed per completed unit | 4.4 |
| Actual labor hours worked | 5,469.3 |
| Actual total labor costs | $83,407 |
| Actual and budgeted fixed overhead | $1,186,000 |
| Standard variable overhead rate | $26.00 per standard labor hour |
| Actual variable overhead costs | $153,140 |
| Overhead is applied on standard labor hours. |
The direct materials quantity variance is
a.2,045.84 favorable
b.2,045.84 unfavorable
c.658.00 unfavorable
d.658.00 favorable
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