Respuesta :
While the quantity variance is $300 in the negative direction, the price variance for December is $150 in the positive direction.
What do mean by standard cost?
A standard cost is the budgeted cost of a regular manufacturing process against which actual costs are compared. Of course, if a new product, service, or process is to be carried out, the initial standard costs will have to be estimated. A standard cost is described as a predetermined cost, an estimated future cost, an expected cost, a budgeted unit cost, a forecast cost, or as the "should be" cost. Standard costs are often an integral part of a manufacturer's annual profit plan and operating budgets.
Where is standard cost used?
Standard costing, often known as standard cost accounting, is used to create budgets and predict future expenses. This type of cost accounting is generally used in the manufacturing sector since it is easier to assign expenses directly to the products being produced .Instead of using the actual cost of manufacturing a product, standard costing assigns "standard costs" to each product. Any resources required in routine activities to produce the product are included in standard costs. This may include costs for labour, overhead, and materials.
Briefing:
Actual Price= $3,150 divide by 500 LCD= $6.3
Standard Price = 6
Actual Quantity = 500
Standard Quantity = $550
Price Variance = (Standard price – Actual price) × Actual Quantity
=($6-6.3)×500
= $150 Favorable
Quantity Variance = (Standard quantity – Actual quantity) × Standard Price
=(550-500)×6
=$300 Unfavorable
Total Direct Material Cost Variance = (Standard quantity × Standard price – Actual quantity actual price)
=(550×6-500×6.3)
=$150 Favorable
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