Actual quantity of direct materials purchased and used 12,000 kg Actual cost of direct materials 72,000 Unfavorable direct materials price variance 6,000 Favorable direct materials quantity variance 2,750 What is the standard quantity allowed during production?
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.
Actual quantity of direct materials purchased and used 12,000 kg
Actual cost of direct materials 72,000
Unfavorable direct materials price variance 6,000
Favorable direct materials quantity variance 2,750
What is the standard quantity allowed during production?
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