Materials Variances Krumple Inc. produces aluminum cans. Production of 12-ounce cans has a standard unit quantity of 4.4 ounces of aluminum per can. During the month of April, 302,000 cans were produced using 1,260,000 ounces of aluminum. The actual cost of aluminum was $0.18 per ounce and the standard price was $0.08 per ounce. There are no beginning or ending inventories of aluminum. Required: Calculate the materials price and usage variances using the columnar and formula approaches. Enter amounts as positive numbers and select Favorable or Unfavorable.
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.
Materials Variances
Krumple Inc. produces aluminum cans. Production of 12-ounce cans has a standard unit quantity of 4.4 ounces of aluminum per can. During the month of April, 302,000 cans were produced using 1,260,000 ounces of aluminum. The actual cost of aluminum was $0.18 per ounce and the standard price was $0.08 per ounce. There are no beginning or ending inventories of aluminum.
Required:
Calculate the materials price and usage variances using the columnar and formula approaches. Enter amounts as positive numbers and select Favorable or Unfavorable.
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