5th Edition

ISBN: 9780134128528

Author: Karen W. Braun, Wendy M. Tietz

Publisher: PEARSON

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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 …

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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 t…

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Textbook Question

Chapter 11, Problem 11.19AE

Calculate and explain direct material variances (Learning Objective 2)

World Class Rings produces class rings. Its best-selling model has a direct materials standard of 16 grams of a special alloy per ring. This special alloy has a standard cost of $63,30 per gram. In the past month, the company purchased 16.800 grams of this alloy at a total cost of $1,061,760. A total of 16,300 grams were used last month to produce 1,000 rings.

Requirements

1. What is the actual cost per gram of the special alloy that World Class Rings purchased last month?
2. What is the direct material price variance?
3. What is the direct material quantity variance?
4. How might the direct material price variance for the company last month be causing the direct material quantity variance?

Definition Definition System of assigning an estimated cost to the product (instead of the actual cost) so that the product cost can be determined well in advance and the pricing of the product can be done on time. Since the actual cost cannot be predicted at the initial stage of the production process, the estimated cost is recorded in the books. Any deviation of the estimated cost of the actual cost is adjusted in the books at the end of the period.

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Chapter 11, Problem 11.18AE

Chapter 11, Problem 11.20AE

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Chapter 11 Solutions

Managerial Accounting (5th Edition)

Ch. 11 - (Learning Objective 1) Which of the following is...Ch. 11 - (Learning Objective 2) The direct material price...Ch. 11 - Prob. 3QC Ch. 11 - Prob. 4QC Ch. 11 - Prob. 5QC Ch. 11 - (Learning Objective 4) Which of the following is...Ch. 11 - Prob. 7QC Ch. 11 - (Learning Objective 6) Which of the following is...Ch. 11 - Prob. 9QC Ch. 11 - (Learning Objective 7Appendix) Which of the...

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Solution Summary: The author calculates the actual cost per gram of special alloy that company WCR purchased last month.

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