nformation about direct materials cost follows for a local company: Standard price per materials gram $ 20 Actual quantity used 2,760 grams Standard quantity allowed for production 2,900 grams Price variance $ 19,320 F Required: What was the actual purchase price per gram?
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.
nformation about direct materials cost follows for a local company:
| Standard price per materials gram | $ | 20 | |
| Actual quantity used | 2,760 | grams | |
| Standard quantity allowed for production | 2,900 | grams | |
| Price variance | $ | 19,320 | F |
Required:
What was the actual purchase price per gram?
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