Concept explainers
Variable Cost Variances: Materials Purchased and Used Are Not Equal
Griffen Company makes pipe using metal. The company uses a
The standard cost sheet for a unit of pipe follows:
August financial results show that the average purchase price of metal was $5.30 per pound. The purchase price variance $34,590 unfavorable. The variable overhead efficiency variance was 8,000 unfavorable. Good output produced totaled 15,000 units.
Required
- a. How many pounds of metal were purchased in August?
- b. What was the direct material efficiency variance in August?
- c. How many pounds of metal were used in August?
- d. Which, if either, of the direct material variances (price or efficiency) would you recommend Griffen management to investigate? Why?
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Fundamentals Of Cost Accounting (6th Edition)
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