The standard quantity of materials for a product was 49 pounds per unit at a standard price of $20 per pound. The actual price per pound of materials was $14.00, and the actual quantity used was 57 pounds. Which of the following is true? The price variance is $342.00 favorable. The quantity variance is $294.00 favorable. The quantity variance is $112.00 unfavorable. The price variance is $274.00 unfavorable.
The standard quantity of materials for a product was 49 pounds per unit at a standard price of $20 per pound. The actual price per pound of materials was $14.00, and the actual quantity used was 57 pounds. Which of the following is true? The price variance is $342.00 favorable. The quantity variance is $294.00 favorable. The quantity variance is $112.00 unfavorable. The price variance is $274.00 unfavorable.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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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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Question
The standard quantity of materials for a product was 49 pounds per unit at a standard price of $20 per pound. The actual price per pound of materials was $14.00, and the actual quantity used was 57 pounds. Which of the following is true?
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The price variance is $342.00 favorable.
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The quantity variance is $294.00 favorable.
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The quantity variance is $112.00 unfavorable.
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The price variance is $274.00 unfavorable.
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