1. Johnson & Johnson

Scenario: Standard Costing and Variance Analysis

Data: Johnson & Johnson set standard costs for one of its pharmaceutical products as follows:

• Standard quantity: 1,000 units
• Standard cost per unit: $100
• Actual quantity produced: 1,200 units
• Actual cost per unit: $110

Requirements:

1. Calculate the materials price variance and materials quantity variance.
2. Determine whether the variances are favorable or unfavorable.
3. Discuss the causes of materials variances at Johnson & Johnson.
4. Analyze the impact of materials variances on Johnson & Johnson's cost management.
5. Evaluate Johnson & Johnson's use of standard costing for cost efficiency.