Reference no: EM132633289
Company material purchases amounted to 5,000 pounds at a price of 7 per pound. Actual costs incurred in the production of 5,000 units were as follows
Total direct labor cost 100,000 at 10 per hour
Cost of Material used 70,000
The standards for one units of company product are as follows
Direct Labor Direct Material
- 3 hours required for one unit - 2 pounds of Material required for one unit
- Rate 24 per hour - Price 20 per pound
Required:
Problem a. Compute the following
- Material variance
- Material quantity variance
- Material price variance
Problem b. Explain how standard costing system facilitates managerial planning, reduction in production costs and decision making. Use your analytical thinking to answer the question