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During June HASF company material purchases amounted to 5,000 pounds at a price of 7 per pound. Actual costs incurred in the production of 5,000 units were as follows   Total direct labor cost 100,000 @10 per hour   Cost of Material used 70,000   The standards for one units of company product are as follows     Direct Labor                                                   Direct Material - 3 hours required for one unit                           - 2 pounds of Material required for one unit - Rate 24 per hour                                             - Price 20 per pound        Required: Compute the following Material variance Material quantity variance Material price variance Being an accounting expert, elaborate that how standard costing system facilitates managerial planning, reduction in production costs and decision making. Use your analytical thinking to answer the question (Word limit: 150-200 words max)

During June HASF company material purchases amounted to 5,000 pounds at a price of 7 per pound. Actual costs incurred in the production of 5,000 units were as follows   Total direct labor cost 100,000 @10 per hour   Cost of Material used 70,000   The standards for one units of company product are as follows     Direct Labor                                                   Direct Material - 3 hours required for one unit                           - 2 pounds of Material required for one unit - Rate 24 per hour                                             - Price 20 per pound        Required: Compute the following Material variance Material quantity variance Material price variance Being an accounting expert, elaborate that how standard costing system facilitates managerial planning, reduction in production costs and decision making. Use your analytical thinking to answer the question (Word limit: 150-200 words max)

Cornerstones of Cost Management (Cornerstones Series)
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter9: Standard Costing: A Functional-based Control Approach
Section: Chapter Questions
Problem 30P: Algers Company produces dry fertilizer. At the beginning of the year, Algers had the following...
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During June HASF company material purchases amounted to 5,000 pounds at a price of 7 per pound. Actual costs incurred in the production of 5,000 units were as follows

 

Total direct labor cost 100,000 @10 per hour

 

Cost of Material used 70,000

 

The standards for one units of company product are as follows

 

 

Direct Labor                                                   Direct Material

- 3 hours required for one unit                           - 2 pounds of Material required for one unit

- Rate 24 per hour                                             - Price 20 per pound     

 

Required:

  1. Compute the following
  • Material variance
  • Material quantity variance
  • Material price variance

Being an accounting expert, elaborate that how standard costing system facilitates managerial planning, reduction in production costs and decision making. Use your analytical thinking to answer the question (Word limit: 150-200 words max)

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