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Explain the concept of materiality in variance analysis

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Reference no: EM132864428

Problem - Product X has a standard direct material cost as follows 30 kilograms of material A at $60 per kg. During a period of production, 100 units of X were manufactured, using 2,500 kgs of material A which cost $170,000.

Required -

(1) Calculate the following variances: (a) the direct material total variance; (b) the direct material price variance; (c) the direct material usage variance.

(2) Explain the concept of materiality in variance analysis.

Reference no: EM132864428

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