Chapter 26, Problem 13E

(a)

To determine

Variances: The variances are used to calculate the find the variation in actual cost by comparing it to the standard cost. Variances normally find the difference in between cost that is actually incurred and cost which was estimated by the business.

Direct Material Variance: The variance which is used to determine the variation in the standard direct material and actual direct material is called direct material variance. It is the sum of material price variance and material quantity variance.

Material Price Variance: The variation in between actual price and estimated price paid for materials is called material price variance. It is used to determine difference in price paid for material the price that was supposed to be paid for material.

Material Quantity Variance: The variance which is used to compare the in the actual quantity of materials utilized in production with estimated quantity of materials material that is supposed to be used in production and helps to find variation is called material quantity variance.

To determine: The total, price and quantity variances for material.

(b)

To determine

To identify: the reason for unfavorable material quantity variance and unfavorable labor quantity variance.