Resset Co. provides the following results of April’s operations: F indicates favorable and U indicates unfavorable. In applying management by exception, the company investigates all variances of $400 or more. Which variances will the company investigate? Direct materials price variance . $ 300 F Direct labor efficiency variance . $2,200 F Direct materials quantity variance . 3,000 U Controllable overhead variance . 400 U Direct labor rate variance . 100 U Fixed overhead volume variance . 500 F
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.
Resset Co. provides the following results of April’s operations: F indicates favorable and U indicates unfavorable.
In applying management by exception, the company investigates all variances of $400 or more.
Which variances will the company investigate?
Direct materials price variance . $ 300 F Direct labor efficiency variance . $2,200 F
Direct materials quantity variance . 3,000 U Controllable overhead variance . 400 U
Direct labor rate variance . 100 U Fixed overhead volume variance . 500 F
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