Direct Materials Variances—Journal Entries Steinberg Company had the following directmaterials costs for the manufacturing of product T in March:Actual purchase price per pound of direct materials $7.50Standard direct materials allowed for units of product T produced 2,100 poundsDecrease in direct materials inventory 100 poundsDirect materials used in production 2,300 poundsStandard price per pound of material $7.25Required1. What was Steinberg’s direct materials purchase-price variance and its direct materials usage variancefor March? Indicate whether each variance was favorable (F) or unfavorable (U). (Round both answersto the nearest whole dollar.)2. Prepare the appropriate journal entries for March.
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.
Direct Materials Variances—
materials costs for the manufacturing of product T in March:
Actual purchase price per pound of direct materials $7.50
Standard direct materials allowed for units of product T produced 2,100 pounds
Decrease in direct materials inventory 100 pounds
Direct materials used in production 2,300 pounds
Standard price per pound of material $7.25
Required
1. What was Steinberg’s direct materials purchase-price variance and its direct materials usage variance
for March? Indicate whether each variance was favorable (F) or unfavorable (U). (Round both answers
to the nearest whole dollar.)
2. Prepare the appropriate journal entries for March.
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