The Following Standards Have Been Established for a Raw Material

question 97

Essay

The following standards have been established for a raw material used to make product N04:

The following data pertain to a recent month's operations: Required:
a. What is the materials price variance for the month?
b. What is the materials quantity variance for the month?

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Definitions:

Direct Labor-Hours

The total time worked directly on the manufacturing of products.

Variable Overhead Rate Variance

The difference between the actual variable overhead incurred and the standard cost of variable overhead allocated to the production based on a predetermined rate.

Variable Overhead Efficiency Variance

Variable Overhead Efficiency Variance is the difference between the standard cost of variable overheads for the actual production and the actual variable overheads incurred, often attributed to efficiency in utilizing variable resources.

Variable Overhead

Indirect production costs that change in response to the level of production activity, such as utility costs in a manufacturing plant that vary with machine usage.