Answered: The standard costs and actual costs for…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The standard costs and actual costs for direct materials for the manufacture of 2,590 actual units of product are as follows:

Standard Costs
Direct materials 2,590 kilograms at $8.50

Actual Costs
Direct materials 2,700 kilograms at $8.10

The direct materials quantity variance is

a. $748 favorable

b. $748 unfavorable

c. $935 favorable

d. $935 unfavorable

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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