Your Company makes a single product. Only one kind of direct material is used to make this product. The company uses a standard cost system. The company's cost records for June show the following data: Number of units produced............. 10,000 Material price variance.................. $9,800 --Unfavorable Material quantity variance............. $8,000 -
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.
Your Company makes a single product. Only one kind of direct material is used to make this product. The company uses a
|
|
Number of units produced............. |
10,000 |
|
|
|
Material price variance.................. |
$9,800 |
--Unfavorable |
|
|
Material quantity variance............. |
$8,000 |
--Favorable |
|
|
Actual direct material used............ |
21,000 |
--pounds |
|
|
Direct materials standard price...... |
$8 |
--per pound |
What is the standard for pounds per unit?
Group of answer choices
2.00
1.98
2.22
2.20
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