Flexer Company Ltd has set the following standards for the production of one unit of product. Normal production each month is 500 units. Direct Material 8 lbs at $6.50 per lb $52 Direct Labour 4 hours at $7.00 per hour $28 During June, actual production
Flexer Company Ltd has set the following standards for the production of one unit of product. Normal production each month is 500 units. Direct Material 8 lbs at $6.50 per lb $52 Direct Labour 4 hours at $7.00 per hour $28 During June, actual production
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter2: Basic Cost Management Concepts
Section: Chapter Questions
Problem 21E: Ellerson Company provided the following information for the last calendar year: During the year,...
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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.
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Transcribed Image Text:Flexer Company Ltd has set the
following standards for the production
of one unit of product. Normal
production each month is 500 units.
Direct Material 8 lbs at $6.50 per lb $52
Direct Labour 4 hours at $7.00 per hour
$28
During June, actual production
amounted to 420 units. All direct
material was purchased and used this
month. The actual cost amounted to:
Direct Material 3,500 lbs $21,875
Direct labor: 1,720 hours 12,212
1) the direct material quantity variance
for June production is calculated to be:
a. $35 U
b. $875 U
c. $910 U
d. $875 F
E. $3,250 F
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