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Variances
Variances
.The product of the standard price times the standard quantity for each unit.
specify how much should be paid for the quantity of input to be used.
the standard cost per unit, the standard price, the standard quantity per unit.
Standard costing
Diaz Company has developed the following standards for one of its products: Direct materials 3.50
pounds × $4 per pound Direct labor 1 hour × $12 per hour Variable manufacturing overhead 1 hour × $6
per hour The following activity occurred during the month of April: Materials purchased 2,000 pounds
costing $22,500 Materials used 1,600 pounds Units produced 250 units Direct labor 550 hours at $12.50
per hour Actual variable manufacturing overhead: $2,500 The company records materials price
variances at the time of purchase. The total variable standard cost is
$8,000
SUPPORTING CALCULATIONS: Direct materials (3.50 pounds × $4) $14.00 Direct labor (1 hour × $12)
12.00 Variable overhead (1 hour × $6) 6.00 Variable standard cost per unit $32.00 Total variable
standard cost (250 units × $32) $8,000