Pearl City Jewelry produced 1,530 rings during March. The standard cost of each ounce of gold used in a ring is $1,050 per ounce. The standard quantity of material for each ring is a half ounce of gold per ring. The cost of gold purchased and used in March was $795,600 at $1,020 per ounce. Determine the material price variance and the material quantity variance for March. Indicate whether each variance is favorable or unfavorable. (Enter all variances as a positive number.) Material price variance $enter a dollar amount Favorable, unfavorable, or neither Material quantity variance $enter a dollar amount Favorable, unfavarorable, or neither
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Pearl City Jewelry produced 1,530 rings during March. The
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Material price variance
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$enter a dollar amount | Favorable, unfavorable, or neither | |||
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Material quantity variance
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$enter a dollar amount | Favorable, unfavarorable, or neither |
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