The standard cost of Product B manufactured by Pharrell Company includes 2.4 units of direct materials at $5.10 per unit. During June, 27,000 units of direct materials are purchased at a cost of $4.85 per unit, and 27,000 units of direct materials are used to produce 11,100 units of Product B. (a) Compute the total materials variance and the price and quantity variances. Total materials variance $enter a dollar amount Materials price variance $enter a dollar amount Materials quantity variance $enter a dollar amount (b) Compute the total materials variance and the price and quantity variances, assuming the purchase price is $5.15 and the quantity purchased and used is 26,600 units. Total materials variance $ Materials price variance $ Materials quantity 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 standard cost of Product B manufactured by Pharrell Company includes 2.4 units of direct materials at $5.10 per unit. During June, 27,000 units of direct materials are purchased at a cost of $4.85 per unit, and 27,000 units of direct materials are used to produce 11,100 units of Product B.
(a)
Compute the total materials variance and the price and quantity variances.
| Total materials variance | $enter a dollar amount | |||
|---|---|---|---|---|
| Materials price variance | $enter a dollar amount | |||
| Materials quantity variance | $enter a dollar amount |
(b)
Compute the total materials variance and the price and quantity variances, assuming the purchase price is $5.15 and the quantity purchased and used is 26,600 units.
| Total materials variance | $ | |||
|---|---|---|---|---|
| Materials price variance | $ | |||
| Materials quantity variance | $ |
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