Under Standard Costing System, if the journal entry to record usage of direct materials include a credit to direct material usage variance, it means that A. Actual price of direct material is higher than the standard price B. Actual price of direct material is lower than the standard price C. Actual direct materials used is higher than the standard quantity of direct materials D. Actual direct materials used is lower than the standard quantity of direct materials
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.
Under
A. Actual price of direct material is higher than the standard price
B. Actual price of direct material is lower than the standard price
C. Actual direct materials used is higher than the standard quantity of direct materials
D. Actual direct materials used is lower than the standard quantity of direct materials
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