The following data pertains to the month of October for Elm. Co. when production was budgeted to be 5,000 units of P90. P90 has standard costs per unit of: 3 lbs of Direct Materials at a cost of $7.00 per lb; .20 hours of Direct Labor at $18.00 per hour, and variable overhead assigned on the basis of 0.05 machine hours at a rate of $50 per machine hour. Actual production of P90 for October was 4,600 units, using 15,100 lbs of material costing a total of $107,778. A. Determine the direct materials quantity variance. (negative numbers indicate a favorable variance)
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.
The following data pertains to the month of October for Elm. Co. when production was budgeted to be 5,000 units of P90. P90 has
A. Determine the direct materials quantity variance. (negative numbers indicate a favorable variance)
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