Acoma, Inc., has determined a standard direct materials cost per unit of $6.80 (2 feet × $3.40 per foot). Last month, Acoma purchased and used 4,630 feet of direct materials for which it paid $15,279. The company produced and sold 2,120 units during the month. Calculate the direct materials price, quantity, and spending variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Round your intermediate calculations to 2 decimal places.)
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.
Acoma, Inc., has determined a standard direct materials cost per unit of $6.80 (2 feet × $3.40 per foot). Last month, Acoma purchased and used 4,630 feet of direct materials for which it paid $15,279. The company produced and sold 2,120 units during the month.
Calculate the direct materials price, quantity, and spending variances. (Indicate the effect of each variance by selecting "F" for favorable, "U" for unfavorable, and "None" for no effect (i.e., zero variance). Round your intermediate calculations to 2 decimal places.)
| Direct material price variance | ||
| direct material quantity variance | ||
| direct materials spending variance |
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