Washington WaterWorks manufactures snorkel gear. During the past month, Washington purchased 4,000 pounds of plastic to use in its dive masks, at a cost of $6,800. The standard price for the plastic is $1.60 per pound. The company actually used 3,800 pounds of the plastic to produce 15,000 dive masks. Required Calculate Washington's direct materials price variance for the month. What's the equation/steps to do this problem?
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.
Washington WaterWorks manufactures snorkel gear. During the past month, Washington purchased 4,000 pounds of plastic to use in its dive masks, at a cost of $6,800. The standard price for the plastic is $1.60 per pound. The company actually used 3,800 pounds of the plastic to produce 15,000 dive masks.
Required
Calculate Washington's direct materials price variance for the month.
What's the equation/steps to do this problem?
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