Standard and Actual Costs for Direct Materials for the Manufacture

question 109

Essay

Standard and actual costs for direct materials for the manufacture of 1,000 units of product were as follows:
Actual costs
1,550 lbs. at $9.10
Standard costs
1,600 lbs. at $9.00
Determine the direct materials (a) quantity variance, (b) price variance, and (c) total cost variance.

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Definitions:

Future Cash Flows

Estimated amounts of money expected to be received or paid out by an entity in the future as a result of financial transactions or business operations.

Net Book Value

The value at which an asset is carried on a balance sheet, calculated as the asset's original cost minus accumulated depreciation and impairments.

Accelerated Depreciation

A method of depreciation where assets lose value at a faster rate in the initial years of their life.

Straight-Line Depreciation

A method of calculating the depreciation of an asset that allocates an equal amount of depreciation each year over the asset's useful life.