The Following Materials Standards Have Been Established for a Particular

question 173

Essay

The following materials standards have been established for a particular product:
The following data pertain to operations concerning the product for the last month:
The direct materials purchases variance is computed when the materials are purchased.
Required:
a.What is the materials price variance for the month?
b.What is the materials quantity variance for the month?

---

Definitions:

Margin Of Safety

The difference between actual sales and break-even sales, indicating how much sales can fall before a business incurs a loss.

Break-Even Sales

The amount of revenue required to cover both the fixed and variable costs of production.

Actual Sales

The exact amount of sales revenue that a company has generated over a specific period, as opposed to projected or forecasted sales.

High-Low Method

A technique used in cost accounting to estimate fixed and variable costs based on the highest and lowest levels of activity.