Using the following product information, calculate the direct materials price variance and the direct materials quantity variance. Indicate whether each variance is favorable or unfavorable. Actual direct materials used (AQ) Actual units produced Actual cost of direct materials used Direct materials standard (4 pounds @ $25 per pound) 19,700 pounds 4,700 units $ 531,900 $ 100 per unit AQ Actual Quantity SQ Standard Quantity AP Actual Price SP Standard Price Note: Indicate the effect of the variance by selecting favorable, unfavorable, or no variance.
Using the following product information, calculate the direct materials price variance and the direct materials quantity variance. Indicate whether each variance is favorable or unfavorable. Actual direct materials used (AQ) Actual units produced Actual cost of direct materials used Direct materials standard (4 pounds @ $25 per pound) 19,700 pounds 4,700 units $ 531,900 $ 100 per unit AQ Actual Quantity SQ Standard Quantity AP Actual Price SP Standard Price Note: Indicate the effect of the variance by selecting favorable, unfavorable, or no variance.
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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Transcribed Image Text:Using the following product information, calculate the direct materials price variance and the direct materials quantity variance.
Indicate whether each variance is favorable or unfavorable.
Actual direct materials used (AQ)
Actual units produced
Actual cost of direct materials used
Direct materials standard (4 pounds @ $25 per pound)
AQ Actual Quantity
SQ Standard Quantity
AQ
Actual Cost
AP Actual Price
SP Standard Price
Note: Indicate the effect of the variance by selecting favorable, unfavorable, or no variance.
19,700
X
$ (39,400)
AP
Direct materials quantity variance
$531,900
$
AQ
19,700
531,900
$ 22,500
x
$ 492,500
19,700 pounds
4,700 units
+
$ 531,900
$ 100 per unit
SP
$25.00
$ 22,500
Standard Cost
SQ
18,800
X
x
$470,000
SP
$ 25.00
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