Does the pattern of the variance suggest great fenders managers have been making trade-offs? Explain the blank direct material cost variance. Combine with the blank direct material efficiency variance. Suggest that managers may have used blank direct materials. The net effect on the total direct material variance is blank.
Added by Andrea B.
Step 1
Let's think step by step. Show more…
Show all steps
Your feedback will help us improve your experience
Ameer Said and 65 other Principles of Accounting educators are ready to help you.
Ask a new question
Labs
Want to see this concept in action?
Explore this concept interactively to see how it behaves as you change inputs.
Recommended Videos
When inputs are substitutable, how can the direct materials efficiency variance be decomposed further to obtain useful information?
The manager of a manufacturing firm received the following information related to the last period's direct materials and direct labor variances: Direct materials price variance . . . . . . . . . . . . . . . . . Favorable Direct materials quantity variance . . . . . . . . . . . . . . Favorable Direct labor rate variance . . . . . . . . . . . . . . . . . . Unfavorable Direct labor efficiency variance . . . . . . . . . . . . . . . Favorable a. Ignoring all other variances, what are possible reasons for a favorable direct materials price variance? b. Given that the quality of direct materials purchased was exactly as expected, how would you explain the above combination of the four variances?
Jennifer S.
Direct Materials Variances The following data relate to the direct materials cost for the production of 2,200 automobile tires: Actual: 51,700 lb. at $1.70 Standard: 52,700 lb. at $1.75 a. Determine the direct materials price variance, direct materials quantity variance, and total direct materials cost variance. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number. Price variance: Favorable Quantity variance: Favorable Total direct materials cost variance: Favorable If the favorable use of raw materials had been caused by the purchase of higher-quality raw materials, the variance should be reported to the Purchasing Department. If the favorable use of raw materials had been used because of production efficiencies, the variance would be reported to the Production Supervisor.
Madhur L.
Recommended Textbooks
Horngren’s Cost Accounting
Cost Accounting A Managerial Emphasis
Principles of Accounting Volume 1: Financial Accounting
Transcript
18,000,000+
Students on Numerade
Trusted by students at 8,000+ universities
Watch the video solution with this free unlock.
EMAIL
PASSWORD