Principles of Managerial Accounting · free preview
Computing and Evaluating Materials Variances
Materials variances split into a price variance from paying more or less than standard and a quantity variance from using more or less than standard, isolating purchasing from production responsibility.
1. The two-question split
The two-question split
2. The formulas
The formulas
3. Timing choice, purchase versus use
Timing choice, purchase versus use
4. Investigating the causes
Investigating the causes
5. Price variance formula
Which formula computes the materials price variance?
6. Price variance computation
12,000 pounds are purchased at 2.10 dollars against a 2.00 dollar standard. Compute the price variance.
7. Standard quantity allowed
Each unit should use 2 pounds of material. Production of 5,000 units occurs. Compute the standard quantity allowed.
8. Quantity variance computation
Actual usage is 10,300 pounds against a 10,000 pound standard allowance, at a 2.00 dollar standard price. Compute the quantity variance.
9. Price variance owner
The materials price variance is primarily the responsibility of the ____ department. One word.
10. Quantity variance owner
The materials quantity variance is primarily the responsibility of ____ management. One word.
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