The per-unit standards for direct materials are 2 pounds at $5 per pound. Last month, 10400 pounds of direct materials that actually cost $50800 were used to produce 5800 units of product. The direct materials quantity variance for last month was $6000 unfavorable. $7200 unfavorable. $2900 favorable. $6000 favorable.
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 per-unit standards for direct materials are 2 pounds at $5 per pound. Last month, 10400 pounds of direct materials that actually cost $50800 were used to produce 5800 units of product. The direct materials quantity variance for last month was
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