
Concept explainers
Direct Materials Price and Quantity Variance:
Direct material price variance is said to occur when the actual costs of direct material incurred for production is different from that of the projected budget of direct materials price. Through the direct materials price variance the production process may be become more effective and efficient by taking corrective measures against unfavorable price variances.
Direct material quantity variance takes place when the actual quantity of direct materials required to generate a certain level of output is higher than the pre-determined or budgeted quantity of direct materials. The wastage or shortage of raw materials quantity can be analyzed through this variance and thus can be fixed.
Direct material price and quantity variance and classify them as favorable and unfavorable.

Want to see the full answer?
Check out a sample textbook solution
Chapter 21 Solutions
Financial & Managerial Accounting: Information for Decisions w Access Card, 5th edition, ACC 211 & 212, Northern Virginia Community College
- A company is considering two different inventory valuation methods: FIFO (First-In, First-Out) and LIFO (Last-In, First-Out). Discuss the potential impact of each method on the company's financial statements during periods of rising prices. Which method would result in a higher cost of goods sold and lower net income?arrow_forwardnonearrow_forwardGeneral accountingarrow_forward
- Compute the estimated inventory on June 30arrow_forwardHarrisTech Inc.’s year-end 2023 balance sheet lists current assets of $915,000, fixed assets of $748,000, current liabilities of $592,000, and long-term debt of $801,000. What is HarrisTech’s total stockholders’ equity?arrow_forwardWhat was the absorption costing net operating income last year ?arrow_forward
- AccountingAccountingISBN:9781337272094Author:WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.Publisher:Cengage Learning,Accounting Information SystemsAccountingISBN:9781337619202Author:Hall, James A.Publisher:Cengage Learning,
- Horngren's Cost Accounting: A Managerial Emphasis...AccountingISBN:9780134475585Author:Srikant M. Datar, Madhav V. RajanPublisher:PEARSONIntermediate AccountingAccountingISBN:9781259722660Author:J. David Spiceland, Mark W. Nelson, Wayne M ThomasPublisher:McGraw-Hill EducationFinancial and Managerial AccountingAccountingISBN:9781259726705Author:John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting PrinciplesPublisher:McGraw-Hill Education





