The following materials standards have been established for raw material used in the company's sole product: Standard quantity per unit of output.......... 0.5 pound Standard price............................................ $16.60 per pound The following data pertain to operations concerning the product for the last month: Actual cost of materials............................. $35,200 Actual materials used in production.......... 2,200 pounds Actual output............................................. 4,200 units What is the materials price variance for the month? Group of answer choices $1,660 U $1,320 F $1,660 F $2,980 F $1,320 U
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 materials standards have been established for raw material used in the company's sole product:
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Standard quantity per unit of output..........
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0.5 pound
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|
|
Standard price............................................
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$16.60 per pound
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The following data pertain to operations concerning the product for the last month:
|
|
Actual cost of materials.............................
|
$35,200
|
|
|
Actual materials used in production..........
|
2,200 pounds
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|
|
Actual output.............................................
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4,200 units
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What is the materials price variance for the month?
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