Asked by Esmeralda Pimentel on Apr 30, 2024
Verified
Hsu Company produces a part with a standard of 5 yards of material per unit. The standard price of one yard of material is $8.50. During the month, 8,800 parts were manufactured, using 45,700 yards of material at a cost of $8.30.?Determine the
(a) price variance,
(b) quantity variance, and
(c) cost variance.
Price Variance
The difference between the standard cost of a product or service and its actual cost, used in budgeting and financial analysis.
Quantity Variance
A measure used in budgeting and accounting to compare the actual quantity of materials or products used to the expected amount under standard costing.
Cost Variance
The difference between the expected cost of a project or production and the actual cost.
- Master the techniques for calculating discrepancies in direct materials, direct labor, and factory overhead expenditures.
- Discern and describe the assorted types of variances, including those related to price, quantity, rate, time, and volume.
- Display an understanding of how management employs standard costs and variances in making decisions.
Verified Answer
(b) Quantity Variance = [45,700 - (5 × 8,800)] × $8.50 = $14,450 Unfavorable?
(c) Total Cost Variance = $5,310 Unfavorable
Learning Objectives
- Master the techniques for calculating discrepancies in direct materials, direct labor, and factory overhead expenditures.
- Discern and describe the assorted types of variances, including those related to price, quantity, rate, time, and volume.
- Display an understanding of how management employs standard costs and variances in making decisions.
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