The standard costs and actual costs for direct materials for the manufacture of 2,000 actual units of product are as follows: Standard Costs Direct materials 2,000 kilograms at $8.70 Actual Costs Direct materials 2,100 kilograms at $8.20 The direct materials quantity variance is a.$870 unfavorable b.$696 unfavorable c.$696 favorable d.$870 favorable
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.
The
| Standard Costs | |
| Direct materials | 2,000 kilograms at $8.70 |
Actual Costs |
|
| Direct materials | 2,100 kilograms at $8.20 |
The direct materials quantity variance is
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
