Williams uses a standard cost accounting system and reported the following results with respect to direct materials.
Question:
Williams uses a standard cost accounting system and reported the following results with respect to direct materials. The company analyzes is standards on a regular basis and considers them to be very good measures of cost and efficiency. The company records the purchase price variance at the time the material is purchased. It records all materials issued to WIP at standard cost at which time all other material variances other than the purchase price variance are recorded. Information for April is presented below
Price of direct materials purchased: $30,960
Budgeted production: 5,000 finished units
Budgeted direct materials usage at standard: 10,000 pounds
Budgeted direct material cost at standard: $21,000
Actual production: 5,300 finished units
Pounds of direct materials purchased: 12,000 pounds
Pounds of direct materials used in production: 11,700 pounds
Evaluate how well the company managed its raw material costs and usage during April. Support your discussion with calculations.
Managerial Accounting Tools for business decision making
ISBN: 978-1118096895
6th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso