The standard cost of Product B manufactured by Sheridan Company includes 2.2 units of direct materials at $6.10 per unit. During June, 27,200 units of direct materials are purchased at a cost of $5.90 per unit, and 27,200 units of direct materials are used to produce 12,000 units of Product B. (a) Compute the total materials variance and the price and quantity variances. Total materials variance Materials price variance Materials quantity variance $ $ $ Unfavorable Favorable Neither favorable nor unfavorable
The standard cost of Product B manufactured by Sheridan Company includes 2.2 units of direct materials at $6.10 per unit. During June, 27,200 units of direct materials are purchased at a cost of $5.90 per unit, and 27,200 units of direct materials are used to produce 12,000 units of Product B. (a) Compute the total materials variance and the price and quantity variances. Total materials variance Materials price variance Materials quantity variance $ $ $ Unfavorable Favorable Neither favorable nor unfavorable
Chapter1: Financial Statements And Business Decisions
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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.
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Transcribed Image Text:(b)
Compute the total materials variance and the price and quantity variances, assuming the purchase price is $6.20 and the quantity
purchased and used is 26,200 units.
Total materials variance
Materials price variance
$
$
Materials quantity variance $
Transcribed Image Text:The standard cost of Product B manufactured by Sheridan Company includes 2.2 units of direct materials at $6.10 per unit. During
June, 27,200 units of direct materials are purchased at a cost of $5.90 per unit, and 27,200 units of direct materials are used to
produce 12,000 units of Product B.
(a)
Compute the total materials variance and the price and quantity variances.
Total materials variance
Materials price variance
$
S
Materials quantity variance $
Unfavorable
Favorable
Neither favorable nor unfavorable
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