The following data relate to direct materials costs for February:
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.
Use this information to answer the question that follow.
The following data relate to direct materials costs for February:
Materials cost per yard: standard, $1.96; actual, $2.03
Standard yards per unit: standard, 4.73 yards; actual, 5.21 yards
Units of production: 9,100
Calculate the direct materials price variance.
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