Troopers Company had budgeted 50,000 units of output using 50,000 units of raw materials at a totla material cost of P100,000. Actual output was 50,000 units of product requiring 45,000 units of raw materials at a cost of P2.10 per unit. What is the direct materials price variance? Indicate if favorable or unfavorable. What is the direct materials usage variance? Indicate if favorable or unfavorable.
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.
Troopers Company had budgeted 50,000 units of output using 50,000 units of raw materials at a totla material cost of P100,000. Actual output was 50,000 units of product requiring 45,000 units of raw materials at a cost of P2.10 per unit.
- What is the direct materials price variance? Indicate if favorable or unfavorable.
- What is the direct materials usage variance? Indicate if favorable or unfavorable.
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