Acme Manufacturing uses standard costing. Using the following data, calculate th

Question

Acme Manufacturing uses standard costing. Using the following data, calculate the Material Cost Variance. Std Materials 5 sheets at $6.20 31 Std Direct Labor 2 hrs at $10 20 Std Mfg Ovrhd 2 direct labor hrs at $5 10 Total Standard Cost per unit 60 Actual Material Price 5 sheets at $5.90 29.5 Actual Sheets Used 60000 This problem is a variation of the problem on page 204 chapter 24 Remember that when analyzing variances a negative result can be favorable in some cases and unfavorable in others and the same goes for positive results. You have to use some common sense.

Explanation / Answer

Qty Rate Amt Standard 5.00 6.20 31.00 Qty Rate Amt Actual 5.00 5.90 29.50 Actual Usage of Material 60000 Units Produced 12000 (60000/5) Qty Rate Amt Standard Cost for Actuals 60000 6.20 3,72,000 Qty Rate Amt Actual Cost for Actuals 60000 5.90 3,54,000 Direct Material Variance: (Standard Cost-Actual Costs) (372000-354000) 18000 Favourable Direct Material Price Variance: (S.Price-Actual Price)*Actual Usgae (6.20-5.90)*60000 18000 Favourable

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