Resources' requirements, standard pounds per unit Resources' standard price, per pound Units produced Resources used for production, pounds Resources' actual price, per pound 2.5 $3.35 15,000 36,900 $3.55 Using formulas and cell references, perform the required analysis, and input your an Amount column. Select the corresponding type of variance in the dropdowns in cells results for the green entry cells (C15:C17) into the appropriate fields in CNOWV2 for Amount Favorable or Unfavorable a. Direct materials price variance b. Direct materials quantity variance c. Direct materials cost variance Favorable or Unfavorable Favorable or Unfavorable
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.
Formula:
Direct materials price variance = ( Standard price - actual price ) x Actual quantity.
Deduction of actual price from standard price which to be multiplied with actual quantity derives the direct materials price variance.
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