Bailey Corporation manufactures orange safety suits for road workers. The following information relates to the corporation's purchases and use of material for April: Material purchased 10,000 yards Material used in production 10,000 yards Standard material allowed for suits produced 10,800 yards Its materials quantity variance for April was $6,000 Favorable. What does the company use as a standard price per yard of material for its safety suits? A. $5.75 per yard B. $7.50 per yard C. $6.25 per yard D. $6.00 per yard
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.
23 Bailey Corporation manufactures orange safety suits for road workers. The following information relates to the corporation's purchases and use of material for April:
|
Material purchased |
10,000 |
yards |
|
Material used in production |
10,000 |
yards |
|
Standard material allowed for suits produced |
10,800 |
yards |
Its materials quantity variance for April was $6,000 Favorable. What does the company use as a standard price per yard of material for its safety suits?
| A. |
$5.75 per yard
|
|
| B. |
$7.50 per yard
|
|
| C. |
$6.25 per yard
|
|
| D. |
$6.00 per yard |
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