The computer system for Number 14, LLC, a manufacturer of basketball jerseys, fell victim to an internet virus. The manager was able to determine from various sources that 2,000 more pounds were used in the production of 20,000 jerseys last period than purchased. Records show that the total direct material variances was $40,000 favorable. The direct material price variance was documented to be $120,000 unfavorable, which resulted from the actual cost per yard of direct material being $2 higher than the expected cost of $16 per yard. Additional documentation could not be found for the direct materials quantity variance. The amount of yards the company expected to use per jersey is A. 3.6000 yards B. 3.6125 yards C. 3.3875 yards D. 3.6714 yards E. None of the above.
The computer system for Number 14, LLC, a manufacturer of basketball jerseys, fell victim to an internet virus. The manager was able to determine from various sources that 2,000 more pounds were used in the production of 20,000 jerseys last period than purchased. Records show that the total direct material variances was $40,000 favorable. The direct material price variance was documented to be $120,000 unfavorable, which resulted from the actual cost per yard of direct material being $2 higher than the expected cost of $16 per yard. Additional documentation could not be found for the direct materials quantity variance. The amount of yards the company expected to use per jersey is A. 3.6000 yards B. 3.6125 yards C. 3.3875 yards D. 3.6714 yards E. None of the above.
Chapter8: Standard Costs And Variances
Section: Chapter Questions
Problem 5PA: Ed Co. manufactures two types of O rings, large and small. Both rings use the same material but...
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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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The computer system for Number 14, LLC, a manufacturer of basketball jerseys, fell victim to an internet virus. The manager was able to determine from various sources that 2,000 more pounds were used in the production of 20,000 jerseys last period than purchased. Records show that the total direct material variances was $40,000 favorable. The direct material price variance was documented to be $120,000 unfavorable, which resulted from the actual cost per yard of direct material being $2 higher than the expected cost of $16 per yard. Additional documentation could not be found for the direct materials quantity variance. The amount of yards the company expected to use per jersey is
3.6000 yards
3.6125 yards
3.3875 yards
3.6714 yards
None of the above.
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