Waterway produces 5-foot USB cables. During the past year, the company purchased 215,000 feet of plastic-coated wire at a price o $0.50 per foot. The direct materials standard for the cables allows 6 feet of wire at a standard price of $0.55 per foot. During the yea the company used a total of 245,000 feet of wire to produce 42,000 5-foot cables. Calculate Waterway's direct materials quantity variance for the year. Direct material quantity variance $
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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