Management by exception means that managers focus on the most significant differ

Question

Management by exception means that managers focus on the most significant differences between actual costs an O True O False QUESTION 5 A company provided the following direct materials cost information. Compute the direct material quantity variance Standard costs assigned: Direct materials standard cost (405,000 units @ $2.00/unit) Actual costs Direct material costs incurred (403.750 units @ S2201 unit).····· 810,000 5 888,250 $2,750 Unfavorable $2.250 Unfavorable $2,750 Favorable $78 250 Favorable $2 500 Favorable QUE S TION 6 e budget is basec on a single predicted amount of sales or other activity

Explanation / Answer

Q5. Answer is $2500 favorable

Explanation: Standard Quantity of material alowed:405,000 units

Stndard price per unit: $ 2.00 per unit

Actual Quantity used: 403,750 units

Material Quantity Variance: Standard price per unit (Standard quantity - Actual Quantity )

                                          = 2.00 (405,000 -403750) = $ 2,500 Fav

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