Material Cost Variance: The difference between the standard cost of material specified and the actual cost of the material used is the Material Cost Variance. Material Cost Variance arises because of two reasons • Actual price of the material varies from the standard price and/or • Actual quantity of material used varies from the standard quantity. Therefore, Material Cost Variance is the sum of (i) Material Price Variance and (ii) Material Quantity Variance. The following formulas are used to calculate Material Cost Variance: Material Cost Variance(MCV) = Material Price Variance(MPV) + Material Quantity Variance(MQV) Also Material Cost Variance (MCV) = Standard Cost – Actual Cost Material Cost Variance gives a view of deviations from the set standards which can be either favorable or unfavorable To determine: The Actual Total Direct Material Cost

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Answer 1

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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.

Chapter 23, Problem 10QS

To determine

Concept Introduction:

Material Cost Variance: The difference between the standard cost of material specified and the actual cost of the material used is the Material Cost Variance. Material Cost Variance arises because of two reasons

• Actual price of the material varies from the standard price and/or

• Actual quantity of material used varies from the standard quantity.

Therefore, Material Cost Variance is the sum of (i) Material Price Variance and (ii) Material Quantity Variance.

The following formulas are used to calculate Material Cost Variance:

Material Cost Variance(MCV) = Material Price Variance(MPV) + Material Quantity Variance(MQV)

Also Material Cost Variance (MCV) = Standard Cost – Actual Cost

Material Cost Variance gives a view of deviations from the set standards which can be either favorable or unfavorable

To determine: The Actual Total Direct Material Cost

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Please explain this financial accounting problem by applying valid financial principles.

Kendrick Company prepares monthly financial statements and uses the gross profit method to estimate ending inventories. Historically, the company has had a 40% gross profit rate. During August, net sales amounted to $350,000; the beginning inventory on August 1 was $85,000; and the cost of goods purchased during August amounted to $190,000. The estimated cost of Kendrick Company's inventory on August 31 is ____. A. $26,000 B. $50,000 C. $78,000 D. $65,000

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Answer 2

Question

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.

Chapter 23, Problem 10QS

To determine

Concept Introduction:

Material Cost Variance: The difference between the standard cost of material specified and the actual cost of the material used is the Material Cost Variance. Material Cost Variance arises because of two reasons

• Actual price of the material varies from the standard price and/or

• Actual quantity of material used varies from the standard quantity.

Therefore, Material Cost Variance is the sum of (i) Material Price Variance and (ii) Material Quantity Variance.

The following formulas are used to calculate Material Cost Variance:

Material Cost Variance(MCV) = Material Price Variance(MPV) + Material Quantity Variance(MQV)

Also Material Cost Variance (MCV) = Standard Cost – Actual Cost

Material Cost Variance gives a view of deviations from the set standards which can be either favorable or unfavorable

To determine: The Actual Total Direct Material Cost

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

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Answer 3

Question

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.

Chapter 23, Problem 10QS

To determine

Concept Introduction:

Material Cost Variance: The difference between the standard cost of material specified and the actual cost of the material used is the Material Cost Variance. Material Cost Variance arises because of two reasons

• Actual price of the material varies from the standard price and/or

• Actual quantity of material used varies from the standard quantity.

Therefore, Material Cost Variance is the sum of (i) Material Price Variance and (ii) Material Quantity Variance.

The following formulas are used to calculate Material Cost Variance:

Material Cost Variance(MCV) = Material Price Variance(MPV) + Material Quantity Variance(MQV)

Also Material Cost Variance (MCV) = Standard Cost – Actual Cost

Material Cost Variance gives a view of deviations from the set standards which can be either favorable or unfavorable

To determine: The Actual Total Direct Material Cost

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Answer 4

Question

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.

Chapter 23, Problem 10QS

To determine