Exercise 17-22 (Algo) Variable Cost Variances: Materials Purchased and Materials Used Are Not Equal LO 17-2) Fischer Fabrication reported the following information concerning its direct materials: Direct materials purchased (actual) Standard cost of materials purchased Standard price times actual amount of materials used $365,600 $352,500 $ 324,500 55,100 units $6 Actual production Standard direct materials costs per unit produced Required: Compute the direct materials cost variances. Note: Indicate the effect of each variance by selecting "F" for favorable, or "U" for unfavorable. If there is no effect, do not select either option. Direct Materials Price variance Efficiency variance Total direct materials cost variance

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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.