I In reviewing activity for July, the controller of Mathis, Inc., collected the following data concerning direct materials. Actual production 103,600 units Direct materials purchased (actual) $ 1,644,000 Standard cost of materials purchased 1,557,000 Standard direct materials costs per unit produced 14.20 Standard price times actual amount of materials used 1,408,950 Required: Compute the direct materials cost variances. (Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)
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.
I
In reviewing activity for July, the controller of Mathis, Inc., collected the following data concerning direct materials.
| Actual production | 103,600 | units | |
| Direct materials purchased (actual) | $ | 1,644,000 | |
| 1,557,000 | |||
| Standard direct materials costs per unit produced | 14.20 | ||
| Standard price times actual amount of materials used | 1,408,950 | ||
Required:
Compute the direct materials cost variances. (Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option.)
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