8th Edition

ISBN: 9781259917066

Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.

Publisher: Mcgraw-hill Education,

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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 …

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 t…

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Textbook Question

Chapter 9, Problem 4E

Direct Materials Variances
Bandar Industries Berhad of Malaysia manufactures sporting equipment. One of the companys products. a football helmet for the North American market, requires a special plastic. During the quarter ending June 30, the company manufactured 35,000 helmets, using 22.500 kilograms of plastic. The plastic cost the company $l7l000.
According to the standard cost card, each helmet should require 0.6 kilograms of plastic. at a cost of $8 per kilogram.
Required:
1. What is the standard quantity of kilograms of plastic (SQ) that is allowed to make 35,000 helmets?
2. What is the standard materials cost allowed (SQ * SP) to make 35.000 helmets?
3. What is the materials spending variance?
4. ‘What is the materials price variance and the materials 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 9, Problem 3E

Chapter 9, Problem 5E

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Chapter 9 Solutions

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Solution Summary: The author explains that material variance means difference between the budgeted material and in the actual material cost.

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Chapter 9 Solutions