The following information is available for DEF Company pertaining to its budgeted and actual activities...
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Accounting
The following information is available for DEF Company pertaining to its budgeted and actual activities for the period.
Item
Budgeted Activity (10,000 units)
Actual Activity (12,000 units)
Sale Price
$10.00 per unit
$9.75 per unit
Variable Costs (per unit)
Direct Materials
$2.00 per unit
$1.89 per unit
Direct Labor
$3.00 per unit
$3.05 per unit
Factory Supplies
$0.25 per unit
$0.25 per unit
Utilities
$0.35 per unit
$0.33 per unit
Selling Costs
$0.50 per unit
$0.45 per unit
Fixed Costs (for the period)
Depreciation
$2,500
$3,000
Administrative Expenses
$15,000
$13,000
Property Taxes
$1,000
$1,000
Factory Supplies, Utilities, and Depreciation are considered to be overhead items.
The standard for each unit for direct materials is to use 10 ounces at a cost of $0.20 per ounce. The actual production used 9 ounces at a cost of $0.21 per ounce.
The standard for each unit for direct labor is to use 0.20 hours at $15.00 per hour. The actual production used 0.20 hours at $15.25 per hour.
Apply variance analysis for direct materials. Calculate a price variance, quantity variance, and total direct materials variance.
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