Exeter has a materials standard of 1 pound per unit of output. Each pound has a standard price of $28 per pound. During July, Exeter paid $138,000 for 4,850 pounds, which it used to produce 4,790 units. What is the direct materials quantity variance? Multiple Choice $4,280 unfavorable $1,300 favorable $1,680 unfavorable $2,200 unfavorable
Variance Analysis
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 the variance so that the necessary steps should be taken to correct that variance.
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 the various expenses.
Exeter has a materials standard of 1 pound per unit of output. Each pound has a standard price of $28 per pound. During July, Exeter paid $138,000 for 4,850 pounds, which it used to produce 4,790 units. What is the direct materials quantity variance?
Multiple Choice
-
$4,280 unfavorable
-
$1,300 favorable
-
$1,680 unfavorable
-
$2,200 unfavorable
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
