The following information relates to product A: Quantity Unit Price Cost Per Unit Material (kg) 5 £15 £75 Labour (hours) 4 £20 £80 Budgeted production 1250 Units Actual production 1000 Units Actual inputs were as follows: Material 6000 Kgs £100,000 Labour 3800 hours £70,000 A). Calculate Material Cost Variance Choose one from the following: A. £10,000 Unfavourable B. £15,000 Favourable C. £25,000 Unfavourable D. £30,000 Favourable
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 information relates to product A:
|
Quantity |
Unit Price |
Cost Per Unit |
||
|
Material (kg) |
5 |
£15 |
£75 |
|
|
Labour (hours) |
4 |
£20 |
£80 |
|
|
Budgeted production |
1250 |
Units |
||
|
Actual production |
1000 |
Units |
||
|
|
||||
|
Actual inputs were as follows: |
||||
|
Material |
6000 |
Kgs |
£100,000 |
|
|
Labour |
3800 |
hours |
£70,000 |
A). Calculate Material Cost Variance
Choose one from the following:
| A. |
|
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| B. |
|
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| C. |
|
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| D. |
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