Gray Milling Company has the following information regarding direct materials: Actual pounds of direct materials purchased and used 47,000 Standard quantity of direct materials 2.5 pounds per finished good Actual production 20,000 finished goods Direct materials quantity variance $11,500 F Direct materials price variance $ 9,400 U What is Gray's actual price per pound of direct materials. Select one: a. $4.25/lb b. $3.70/lb c. $2.75/lb d. $3.83/lb
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.
Gray Milling Company has the following information regarding direct materials:
Actual pounds of direct materials purchased and used 47,000
Standard quantity of direct materials 2.5 pounds per finished good
Actual production 20,000 finished goods
Direct materials quantity variance $11,500 F
Direct materials price variance $ 9,400 U
What is Gray's actual price per pound of direct materials.
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