Exercise 23-14 Picard Landscaping plants grass seed as the basic landscaping for
ID: 2522155 • Letter: E
Question
Exercise 23-14 Picard Landscaping plants grass seed as the basic landscaping for business campuses. During a recent month, the company worked on three projects (Remington, Chang, and Wyco). The company is interested in controlling the materials costs, namely the grass seed, for these plantings projects. In order to provide management with useful cost control information, the company uses standard costs and prepares monthly variance reports. Analysis reveals that the purchasing agent mistakenly purchased poor-quality seed for the Remington project. The Chang project, however, received higher-than-standard-quality seed that was on sale. The Wyco project received standard-quality seed. However, the price had increased and a new employee was used to spread the seed. Shown below are quantity and cost data for each project. Project Remington Actual Quantity Costs 510 lbs. $1,224 400 920 610 1,586 Standard Quantity Costs 410 lbs. $1,025 410 1,025 500 1,250 Chang Total Variance $199 U 105 F 336 U $430 U Wyco Total varianceExplanation / Answer
(a) Price variance
Price variance is calculated by = (Actual cost incurred- Standard cost)* Actual Quantity Purchased
So in the above Question:-
Total Price Variance = 430 Unfavourable
(b) Quantity Variance
Quantity Variance is calculated by = ( Standard Qty- Actual Qty)* Standard Price
Total Quantity Variance = 200 Unfavourable
Project Actual Pounds Purchased Actual Price Per Pound Standar Price Per Pound Actual Cost-Std Cost Price Variance Remington 510 1224 1025 1224-1025=199 U 199*510=101490 Unfavourable Chang 400 920 1025 920-1025=105 F 105*400=42000Favourable Wyco 610 1586 1250 1586-1250=336 U 336*610=204960 UnfavourableRelated Questions
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