The Provence Company has the following flexible budget variances: unfavorable direct material price variance and favorable direct material quantity variance. A logical explanation for this is: a) They made fewer products than they budgeted for. b) They purchased cheaper material than budgeted. c) All of these choices are logical explanations. d) They purchased higher quality material than budgeted.
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.
The Provence Company has the following flexible
a) They made fewer products than they budgeted for.
b) They purchased cheaper material than budgeted.
c) All of these choices are logical explanations.
d) They purchased higher quality material than budgeted.
Step by step
Solved in 3 steps
