Oliver Enterprises has collected the following data for one of its products: Direct materials standard (8 pounds per unit @ $0.44/lb.) $3.52 per finished good Direct materials flexible budget variance−unfavorable $13,000 Actual Direct Materials Used (AQU) 40,000 pounds Actual finished goods produced 20,000 units How much is the direct materials quantity variance?
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.
Oliver Enterprises has collected the following data for one of its products:
|
Direct materials standard (8 pounds per unit @ $0.44/lb.) |
$3.52 per finished good |
|
Direct materials flexible |
$13,000 |
|
Actual Direct Materials Used (AQU) |
40,000 pounds |
|
Actual finished goods produced |
20,000 units |
How much is the direct materials quantity variance?
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