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Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello
Edition 17ISBN: 978-0078025778Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello
Edition 17ISBN: 978-0078025778 Exercise 48
Understanding Materials Cost Variances
The cost accountant for Blue Pharmaceuticals has informed you that the company's materials quantity variance for the drug Allegro was exactly equal to its materials price variance for the year. The company's normal level of production is 80 batches of Allegro per year. However, due to uncertainties regarding foundation funding, it produced only 60 batches during the current year. Other cost information regarding Allegro's direct materials is as follows:
a. Compute Blue's materials price variance.
b. Compute the standard quantity of materials allowed per batch of Allegro produced.
c. Why would you not expect Blue to have a large materials quantity variance?
The cost accountant for Blue Pharmaceuticals has informed you that the company's materials quantity variance for the drug Allegro was exactly equal to its materials price variance for the year. The company's normal level of production is 80 batches of Allegro per year. However, due to uncertainties regarding foundation funding, it produced only 60 batches during the current year. Other cost information regarding Allegro's direct materials is as follows:
a. Compute Blue's materials price variance.
b. Compute the standard quantity of materials allowed per batch of Allegro produced.
c. Why would you not expect Blue to have a large materials quantity variance?
Explanation
Verified
Verified
Material price variance:
It refers to t...
Financial & Managerial Accounting 17th Edition by Jan Williams ,Susan Haka,Mark Bettner,Joseph Carcello
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