unc.8 A company provided the following direct materials cost information. Compute the direct materials price variance. Standard costs assigned: Direct materials standard cost (410,000 units @ $3.90/unit) $ 1,599,000 Actual costs: Direct materials costs incurred (409,250 units @ $4.00/unit) $ 1,637,000 Multiple Choice $1,599,000 Favorable. $1,599,000 Unfavorable. $40,925 Unfavorable. $40,925 Favorable. $41,000 Favorable.
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.
unc.8
A company provided the following direct materials cost information. Compute the direct materials price variance.
| Direct materials standard cost (410,000 units @ $3.90/unit) | $ | 1,599,000 | |
| Actual costs: | |||
| Direct materials costs incurred (409,250 units @ $4.00/unit) | $ | 1,637,000 | |
Multiple Choice
$1,599,000 Favorable.
$1,599,000 Unfavorable.
$40,925 Unfavorable.
$40,925 Favorable.
$41,000 Favorable.
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