Using the following information about a single-product company, compute its total actual cost of direct materials used. • Direct materials standard cost: 5 lbs. × $2 per lb. = $10. • Total direct materials cost variance: $15,000 unfavorable. • Actual direct materials used: 300,000 lbs. • Actual units produced: 60,000 units. a. $585,000 c. $300,000 e. $615,000 b. $600,000 d. $315,000
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.
Using the following information about a single-product
company, compute its total actual cost of direct materials
used.
• Direct materials
• Total direct materials cost variance: $15,000 unfavorable.
• Actual direct materials used: 300,000 lbs.
• Actual units produced: 60,000 units.
a. $585,000 c. $300,000 e. $615,000
b. $600,000 d. $315,000
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