Week 7, LO 2 Demo

Week 7, LO 2 Demo - Problem Using the general models...

This preview shows pages 1–2. Sign up to view the full content.

Week 7: Standard Costs Week 7 Skill Building Demonstration Problem 2 Compute the direct materials price and quantity variances and explain their significance . Learning Objective 2 Given: Glacier Park Outfitters has the following direct material standards for the fiberfill in its mountain parka: 0.1 kg of fiberfill per parka at \$5.00 per kg. Last month, 210 kgs of fiberfill were purchased and used to make 2,000 parkas. The material cost a total of \$1,029. Compute the direct materials price and quantity variances and explain their significance.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Problem Using the general models : Significance: The \$21 favorable price variance means that the company was able to purchase direct materials at less than the standard cost savings of \$21. The unfavorable quantity variance of \$50 means that the company used 10 KGs more materials than required for the level of output (2000 parkas). Total Variance is \$29 unfavorable ( \$21+(50)) means that the company spent \$29 more than the standard cost to make the \$2000 parkas. Solution...
View Full Document

{[ snackBarMessage ]}

Page1 / 2

Week 7, LO 2 Demo - Problem Using the general models...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online