Asked by Martin hubs-boy on May 05, 2024
Verified
Ruby Company produces a chair that requires 5 yards of material per unit. The standard price of one yard of material is $7.50. During the month, 8,500 chairs were manufactured, using 43,600 yards at a cost of $7.55 per yard.?Determine the
(a) price variance,
(b) quantity variance, and
(c) cost variance.
Price Variance
The difference between the actual price paid for something and its standard or expected cost.
Quantity Variance
The difference between expected and actual quantities used in production, affecting cost and efficiency.
- Acquire knowledge on the calculation of variances pertaining to direct materials, direct labor, and production overheads.
- Determine and expound on the multiple forms of variances, covering price, quantity, rate, time, and volume differences.
- Exhibit mastery in the use of standard costs and variances for decision-making purposes by management.
Verified Answer
RD
Rohit DhendeMay 07, 2024
Final Answer :
(a) Price Variance = ($7.50 - $7.55) × 43,600 = $2,180 Unfavorable?
(b) Quantity Variance = [ (5 × 8,500) - 43,600] × $7.50 = $8,250 Unfavorable?
(c) Cost Variance = $10,430 Unfavorable
(b) Quantity Variance = [ (5 × 8,500) - 43,600] × $7.50 = $8,250 Unfavorable?
(c) Cost Variance = $10,430 Unfavorable
Learning Objectives
- Acquire knowledge on the calculation of variances pertaining to direct materials, direct labor, and production overheads.
- Determine and expound on the multiple forms of variances, covering price, quantity, rate, time, and volume differences.
- Exhibit mastery in the use of standard costs and variances for decision-making purposes by management.