Standard and Actual Costs for Direct Materials for the Manufacture

question 12

Short Answer

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
(c) total cost variance.

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Definitions:

Norms

Socially accepted rules of behavior that dictate the expected conduct of individuals within a group or society.

Scarcity

A fundamental economic problem of having seemingly limitless human wants in a world of limited resources, which leads to the necessity of making choices on how to allocate resources efficiently.

Rewarded

Pertains to receiving a benefit or compensation in return for an action or service.

George Homans

An American sociologist known for his work in developing social exchange theory, explaining social behavior in terms of costs, benefits, and expectations of rewards.