Use the following information to calculate the materials price variance: Direct material purchased and used (kgs) 30,000 Cost of direct material 84,000 Unfavourable direct materials usage variance 3,000 Standard quantity of direct materials allowed for production (kgs) 29,000 Select one: a. $6,000 U b. $2,800 F c. $6,000 F d. $2,800 U
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.
Use the following information to calculate the materials price variance:
| Direct material purchased and used (kgs) | 30,000 |
| Cost of direct material | 84,000 |
| Unfavourable direct materials usage variance | 3,000 |
| Standard quantity of direct materials allowed for production (kgs) | 29,000 |
$6,000 U
$2,800 F
$6,000 F
$2,800 U
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