Steinberg Company had the following direct materials costs for the manufacturing of product T in March: Actual purchase price per pound of direct materials $ 8.90 Standard direct materials allowed for units of product T produced 3,500 pounds Decrease in direct materials inventory 100 pounds Direct materials used in production 3,700 pounds Standard price per pound of material $ 8.65 Required: 1. What was Steinberg’s direct materials purchase-price variance and its direct materials usage variance for March? Indicate whether each variance was favorable (F) or unfavorable (U). 2. Prepare the appropriate journal entries for March.
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.
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Steinberg Company had the following direct materials costs for the manufacturing of product T in March: Actual purchase price per pound of direct materials $ 8.90 Standard direct materials allowed for units of product T produced 3,500 pounds Decrease in direct materials inventory 100 pounds Direct materials used in production 3,700 pounds Standard price per pound of material $ 8.65 Required: 1. What was Steinberg’s direct materials purchase-price variance and its direct materials usage variance for March? Indicate whether each variance was favorable (F) or unfavorable (U). 2. Prepare the appropriate
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