Sanchez Company Established a Direct Materials Standard of 4 Pounds

question 87

Essay

Sanchez Company established a direct materials standard of 4 pounds at $4.50 per pound for one of its products.During March,Sanchez purchased 15,000 pounds at $4.42 per pound.
Required:
Based on this information,
(a)Which variance can you calculate?
(b)What is the dollar amount of the variance?
(c)Is the variance favorable or unfavorable?
(d)Do you consider the variance to be sufficiently material that managers should investigate to discover the cause of the variance?

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Definitions:

Bystanders

Individuals who are present at an event or incident but do not take an active role in its outcome.

Audiences

Groups of listeners, viewers, or spectators that observe, follow, or listen to a particular event, performance, or communication.

Accountability

The obligation of an individual or organization to account for its activities, accept responsibility for them, and to disclose the results in a transparent manner.

Negotiator

A person involved in discussions aimed at reaching an agreement or resolving a dispute between parties.