The Swenson Company has a standard costing system. The following data are available for June: Actual quantity of direct materials purchased 35,000 pounds Standard price of direct materials £4 per pound Material price variance £7.000 unfavourable Material quantity variance £4,200 favourable The actual price per pound of direct materials purchased in June is: A. £3.92 B. £4.20 C. £4.08
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 Swenson Company has a
available for June:
Actual quantity of direct materials purchased
35,000 pounds
Standard price of direct materials
£4 per pound
Material price variance
£7.000 unfavourable
Material quantity variance
£4,200 favourable
The actual price per pound of direct materials purchased in June is:
A. £3.92
B. £4.20
C. £4.08
D. £4.32
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