What was the adverse direct material price variance for last month
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.
The standard direct material cost per unit for a product is calculated as follows:
10.5 litres at $2.50 per litre
Last month the actual price paid for 12,000 litres of material used was 4% above standard and the direct
material usage variance was $1,815 favourable. No stocks of material are held.
22.11 What was the adverse direct material price variance for last month?
A $1,000
B $1,200
C $1,212
D $1,260
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